Member Info for Sekforde

The company should be able to buy at least $600m of shares a year even if the windfall tax is increased to 40%. Quite obviously with a market cap of $3.5 bn it cannot spend that money without forcing up the sp eventually. Share buy backs are the equivalent of paying a dividend but without the income tax that would apply to a dividend. It is absolutely the right approach. Judging by the number purchased over the last two day (1,000,000) the new $100m programme will be completed by Christmas.

Ausen where are you getting the 10.7% from. The total short position is 2.44% is it not? That is around 20 million shares that have to be bought back sometime.

If you do the maths ( and many have) even with a 35% windfall tax the free cash flow should in 2023 be around $2bn and more in 2024 with the bad hedges gone. The only relevant assumption is that oil and gas prices remain more or less where they are today which is not a widely optimistic assumption. A company should not have a market cap of considerably less than just 24 months free cash flow. I would call that an aberration. And of course when a share has fallen and fallen for no apparent good reason, we all think are we missing something. But I do not think so. I think this is a transparent responsible well run company producing products that the world will need to use for the next 20 years or more. And a lower price means that the latest $100m will buy more shares for cancellation. All very interesting.

I agree Raging Bull. They can take the loss with good humour and the wife does not plan to retire any time soon. I am not going to break my cardinal rule which is not to engage with the obvious complete nutcases who post so frequently incomprehensible drivel.

Deadly4u thanks for the compliment. My friend has a D Phil from Oxford and speaks 5 languages fluently and he made up his own mind how to advise his wife. So however "dumb" I am, I am sure he is not. She will just have to carry on scrubbing floors a little longer unless of course I and Barclays and Jefferies etc and the sane individuals on this board are eventually proved right and this is a market aberration which will eventually be corrected.....

I persuaded my wealthy American friend to put his wife's entire pension into Harbour at £4.80 on the basis that the company was then worth less than three year's free cash flow. He did his own research and "emphatically" agreed. The wife is on a lecture talk in the US. I am dreading her return to London. BUT at £4.80 it really was a bargain. And now? Words complete fail. But the time to buy is at the point of most fear and pessimism. Could be today is the absolute bottom.

The value of the company is almost back to the desperate level it was earlier in the year (298.5) if you take into account the removal of 7% of share capital as a result of the buybacks. Since then we have had nothing but good news. In particular there was an increase in forecast free cash flow for 2022 and prices of oil and gas have remained high.

Kign good idea. There is certainly a case for keeping the debt at current levels. The interest is deductible and the money not used to pay down debt can be used for more share buybacks at astonishing low levels.

The company really does not have to do any M and A at the moment. The seven years of reserves in the NS could easily be stretched to 10 years with a bit of extra drilling/ties ins. With or without the windfall tax the company will throw off huge free cash flows. I think the days of debt funded acquisitions should be over. We just need to concentrate on existing assets and keep buying the shares. I think the 35% is a certainty. My hope is the Government keeps the super deductions and then with a bit of accounting jiggery pockery the burden should not be too bad.

The letter is a good moderate letter and may have some impact. Linda Cook's job is to stand up for shareholders and she is right to point out what a grim old time we have had. The company is being well run with a clear strategy for the future. And there is a choice to switch production to elsewhere which would just mean switching future investments elsewhere where the tax regime was less punitive.

Not a ramp to calculate free cash flow for 2023 is it? Forecasts that the share price will go to £3 are fairly meaningless unless you think the market will accept about 15 months free cash flow as the correct valuation of the company. The company with its new buybacks is taken advantage of what are already simply preposterously low valuations.

And the debt will not be $1.1 bn at the end of this year. We have a whole quarter before then.

Goldenbadger, you have not allowed enough for tax. We are close to $1bn for windfall tax alone for 2023. But there is ordinary tax to pay as well is there not? This was $400m for 2022 although not clear to me why past losses could not have been used to remove it completely.

500,000 shares bought back today. The significance really is that the purchases that began yesterday were in the wake of the clearly leaked story of the 35% windfall tax. The message from the board is "we can afford to pay a dividend of $200m and spend $400 m a year on share buybacks windfall tax at 35% or 30% or 25%". I am not in favour of any new commitments of any size. I am pleased CAPEX has come down to just $1bn. We should for the time being seek to at least maintain production avoid more significant hedging and ensure that 15% of shares are purchased before the next shareholders' meeting at which time a further mandate should be sought to purchase an additional 15% of the remaining capital. Short squeeze coming soon. It could be painful.

Londoner 7 and others I made a mistake on my earlier calculations. The windfall tax for 2022 was guided at $400m not $500m. So for a full year it would indeed have been $400m x 365/219 = $666.66m. At 35%n for a full year it would be 666 x 35/25 = $933.32m. The guided free cash flow for 2022 is too low because of the assumptions made about oil and gas prices - they are both higher so far and we only have 6 weeks of the year left. So I stand by $2.3bnfree cash flow for 2022. In 2023 assuming prices remain static, we do have lower oil prices than the average for 2022 but we have higher gas prices. We also should have lower interest/finance charges as the debt is cleared and a slightly better hedging position and increased production. Even if you assume the worst and we have 35% windfall tax , this means we end up with a net additional cost of $533M. However, the combined effect of the slightly better hedging, the lower interest/finance cost and the higher gas prices compensating for the lower oil prices and the increase in production overall means we could end 2023 with a fairly similar free cash flow. This is why of you can look past the noise this is just an extraordinary situation.

Enquest's debt is currently $800m. That is the same as Harbour's assuming since the 30th September 2022 Harbour has paid off a further $300m. The huge difference between the two companies is that Harbour is producing currently around 210k boe a day whereas Enquest about 50k. The enterprise value (market cap plus debt) of Enquest is about $1.4bn. The enterprise value of Harbour is about $4.4bn. You can make a case that Enquest is hugely undervalued (it is). But the undervaluation of Harbour is even greater. I have been trying to figure out the logic of the shorters who I acknowledge have had some success so far. Even with the windfall tax at 35% assuming Brent at $90 and gas at 200p a therm free cash flow for 2023 should be over $1.5bn and for 2024 over $2bn and the same again for 2025. I think they must assume some huge crash in oil and gas prices. That seems so unlikely given the restraints on supply and the IMF's forecast rates of world economic growth for 2023 and 2024 (2.7%). Harbour has the advantage of producing something that is not dependent on the performance of the UK economy.

I think so. No reason to panic. Commodities stable. No real debt. Shares cheaper to buy back.

I suspect that the Board just wants to see what actually happens on Thursday. Ironically the huge falls today may tilt the argument against the Chancellor going quite so far as threatened over the weekend. All very difficult to read what is really happening.

It is worth remembering that we went from 298.5 p on 6th July to 492p on 26th August without anything very much happening on the fundamentals. Just a question of great patience for great profit.

I do not know whether I am being referred to as a ramper or not. But there is nothing factually inaccurate in my posts. And I have previously calculated the impact of the windfall tax at 35% at $1025m for 2023. The truth is that this is a staggeringly undervalued stock even with the additional tax burden.