Member Info for Sekforde

Stevo have you managed to do a FCF forecast for this year using the current forward curves for both Enquest and Serica? Tax and the timing of tax is the one issue with which I really struggle. Harbour is so much easier because it has published the sensitivities required to calculate.

Asartara the oil and gas have not been physically lost they just cannot get to the market. From memory the same article had Exxon 20% down and Total 15% down. All these majors have large production in the gulf states. BP was the least affected.

Why not $12bn? Shell can borrow money at 5% a year. So $600m a year to buy an entity which is producing FCF of say $2.5bn this year and $1.5bn thereafter. Would certainly have to pay a premium above the present $6bn valuation. They wanted LLOG at $3.2bn and that company alone must now be worth at least $6bn given the huge increase in prices since December in a low tax country.

I use ICE when attempting to calculate FCF. For May delivery the exchange is now showing Brent at $114.5. The backwardation that follows is just extraordinary and takes us back to around $85 for December delivery. Why any one holding oil does not sell now into the current market and buy into the future market is something I cannot comprehend. It would be like selling an ounce of gold now for $4500 and buying the right to have it returned before Christmas for $3500. Reading my Sunday Times at breakfast this morning I discover Shell has lost about 10% of its oil and gas that came through the Strait of Hormuz (Exxon and Total much more). There is a very easy way of more than replacing that loss which would be to spend $12bn buying Harbour. After all it wanted LLOG and lost out there. $12bn is good value.

Sorry Enquest calling not Serica!

In the last 12 months Serica is up 86.96%, Harbour 40.12% and Enquest 17.94%. In the last 6 months Serica 49.83%, Harbour 38.51% and Enquest 68.05%. I did some buying of Serica when it was around 129p and Harbour when it was around 160p. All three have their attractions especially since the orange monster unleashed against Iran. Any merger between Enquest and Serica would be structured in accordance with current market cap which would mean 25% Enquest and 75% Serica. Kracknoil you are deeply paranoid. No-one is trying to induce fear or mislead any one. And Enquest is not your boyfriend or girlfriend. You do not need to take offence whenever anything negative is said about it. Before Iran Goldman Sachs were forecasting $50 Brent in 2026 and had that happened Serica really would have been calling the insolvency lawyers. Happily all is now fine.

I sold my Enquest shares around 11-12p (near to the low!) and switched to Serica and Harbour which have both outperformed. This was especially so at the year end but remains the position. I think Enquest could have survived for a while at $63 (as it did) but without positive FCF then the debt eventually would have sunk the company. Actually with Brent at well over $100 Enquest looks suddenly attractive again as the high interest debt can all be paid off in 12 months or so and it can then make meaningful use of all its tax losses. It should merge with Serica which deal I hope is being reconsidered.

Enquest will survive now because Brent has risen from around $63 in December /January to well over $100. But for that it would not have. Both Serica and Harbour remain much more attractive as they have fundamentally lower costs and can tolerate a return to more normal prices. Both have out performed. In 2025 Brent averaged around $67 and Enquest generated no FCF. $55 was/is nowhere near breakeven point and so Oil Viking you do need to pay Stevo 12 your losing bet. I have adjudicated against you.

Oilviking you need to pay up on your losing bets.

$ not £!

It changes nothing. The company is more valuable today than yesterday because oil and gas are up again. I think Trump is lying (again!). I do not think the Iranians will open the strait any time soon. I think £100 plus Brent is here for the year.

Bought 25000 but above 283p. Bargain.

Just focus on the maths and the inevitable. The forward curves have improved since yesterday. We should average $95 for the year Brent and $18 for the year gas. So that gives us $600 plus (6 x 170) plus (7 x 150) = $2670m. Add in the $400 arriving for early December transactions and you reach $3070m. This is by no means a one year wonder. The forward curves for gas and oil fall rapidly in 2027 and 2028 But there is a rising contribution from the low tax LLOG. I now have FCF for 2027 and 2028 around $2bn. By the end of this year the ratio of debt to EBITDA should be below 1 allowing a 75% return to shareholders of $1.5bn in each of those years. That would be 25% of the current sp in each year.

Yes these shares sales by a committed seller have no impact at all on the inherent value of the company. And the calvary are coming. I am expecting the company to spend at least $600m on share buybacks this year and perhaps more. And I expect the institutions to spend a similar amount in buying shares when the the company enters the FTSE in June. In fact given HBR is the 76th most valuable company as of yesterday many may start buying in anticipation of the inevitable.

The FCF for this year will if the forward curves hold be above $2.5bn excluding the $400m from the two December deals. If it were down to me I would pay the proposed dividend of $300m and then pay down $1000 of debt and then use the remaining $1.2bn to buy shares. At existing market cap that would eliminate 20% of the shares and we would end the year with net debt of $5.8bn or less.

Even after the falls in gas and oli in the last 24 hours we remain on track for close to FCF of $3bn this year. $600 plus (5x170) plus (6 x 150) = 2550m. Add in the $400m from the December deals and we are up to $2950m. Even assuming that the $400m is excluded then more than $1.1bn will be paid to shareholders THIS year. We know about the $300m reduced dividend. But if over $800m is spent on share buybacks against a market cap of $6bn that is an awful lot of shares that are about to be purchased. Add to that that we will certainly become a FTSE 100 company in June requiring huge buying from tracker funds. I cannot be more bullish.

Also my largest holding by far. No net debt by the end of April and then quite possible to generate entire market cap in FCF in the next 30 months.

I agree. Nothing has changed as a result of Trump's tweet. (Note he has misspelt which "witch" which suggest that no one checks anything he posts.) The Iranians will not open the strait of Hormuz. It is their one strong card. And they have plenty of missiles stored deep in caves along the coast. The BBC security reporter Frank Gardiner commented on this a week ago. Only a land invasion could have any impact and that will not happen.

Keep the faith and continue doing the maths. The forward curves for gas and oil are up again. I now think FCF for this year will be around $3.8bn and next year around $2.5bn. Huge sums will be spent on buybacks and holders will own an ever increasing stake in a ever more valuable company. It is intriguing that the company has not announced the refinancing of the $1bn bridging loan. I suspect the reasons is that it expects to have the ready cash to pay it off.

Hi Asartara. I also think Ithaca is not quite as attractive in valuation terms. It has pursued a very high dividend policy which attracts investors.

Hi Asartara. Yes they do take into account the present hedging book. The management made clear when giving us the sensitivities on 5th March that that was the case. The hedging book was in heavy profit one month ago now it will be showing a loss. I think that the $1.5bn can continue to a perpetuity. A cash generating company should be able to evolve into something else as the world moves away from fossil fuels. But it is probably safe to assume a fcf of $1.5bn from 2027 onwards of 17 years. It will be mainly coming from the US, Argentina and Mexico. 18 years is the current reserve life of LLOG's oil although it is likely to be longer. 1.5k a year for 18 years discounted at 5% a year is $17.534bn. A higher discount rate of say 8% produces a net current value of $14.057 bn. Assuming my $3bn plus in the current year, we need to add $1.5bn to the net current value figures. I do not think the market as a whole can have done the maths or perhaps it does not believe the management's forecasts or it must be using a much higher discount figure. I like Serica a lot. By the end of April of this year it will have no net debt. Using Auctus Advisers figures and adjusting them for the present surge in oil and gas prices since January when they last produced their management approved guide, I believe that that company will make FCF of $600m this year and the same again next year and then perhaps $500m the following year. I assume $300m thereafter for approximately 10 years. So a valuation of less than $1.4bn is far too low.