Member Info for Sekforde

The earnings in the first half were $1.10 per share. If maintained for the second half, the price earnings ratio would be $5.42/S2.2 or 2.46. On buybacks, since the profits were announced on 25th August 2022, 20,1888,263 shares have been purchased and cancelled at a cost of around $110M. Of the $300M allocated to buybacks some $280M has now been used. The rates of buybacks suggests strongly to me that more are about to be announced. They remain the best possible use of surplus cash.

Total cost of buybacks yesterday $11,567,219.

Buy backs yesterday 1,704,833 shares. $9.64M spent. Broker has until year end to spend the entire $300M but will complete in early October at this rate.

Yesterday 1,376,249 shares were purchased at a cost of £6.8M or $7.82M. At that rate it will take less than 13 trading days to use up the additional $100M which we have already began to spend. It is not as if this buying is taking place on a dip. The brokers are in the market despite recent rises. I think more money is on its way to buy up more cheap cheap shares rather than have hundreds of millions sitting in a bank account by next March.

Why should any one get obsessed with £5? At £5 the company is worth less than $5bn which about twice likely free cash flow for 2022.

There is no mystery about the scale of the buybacks. When they commenced in June there were 925,553,663 shares. 49,250,090 have since been eliminated leaving 876,301,573 remaining. The rate of purchases in recent trading days has accelerated which means one thing only: at least a further $100M will be added before the end of the year. These share buy backs are being carried out because, at a market cap of just $4.8bn, the board have concluded that the shares remain so grossly undervalued that they have a duty to their shareholders to use the vast amounts of cash being generated in this way. Absolutely insane to sell at these levels. And buy what instead?

We are in the best possible position. First of all, the new PM and her chancellor have ruled out any more windfall taxes. Second the drop in the price of Brent takes the pressure off consumers and is good for the economy. Third the drop also means that all the hedging of oil looks much better than it did. Fourth we are still benefitting from crazy high gas prices. Fifth the forecasted FCF of up to $2bn for 2022 will be met with the present level of taxes and at the present price level. Sixth we are still on course to be debt free by Christmas. Seventh the lower SP just means more shares will be bought and cancelled. Seventh the lower pound is great for a company which has costs in pounds but sells in dollars.

As my nine year old nephew would say "Come on guys get real". A valuation of $4.52bn is just plain absurd.

It is worth noting that there were 1,343,597 shares purchased by the company for cancellation yesterday at a total cost of £6,355,214 or $7,373,048. This was by far a record. True the company has been precluded from buying in the last four trading sessions. However the amount spent in one day suggests to me that the brokers have instructions to use the $35M unspent from the 16th June 2022 announcement and the $100M announced on 25th August 2022 well before the end of the year. One possible explanation is that the company intends to add to the buybacks later in the autumn.

The average price for the 5 trading days last week was about £4.50. Add 5% and you come to £4.72. So just about. But no problems tomorrow after Monday of last week drops out.

I am buying more today. I am all in Harbour. I think the risk is all gone as the debt has to all intents and purposes been cleared. I think that all that has happened is that a few have taken profits. I cannot see the advantage of cash earning 2% when this is earning more than 50% in terms of free cash flow. Rookie your purchase at 494 was absolutely rational and it is impossible to guess daily price movements. A lower price enables more shares to be bought. That should start on Thursday and they need to go at some clip to get through $135M by year end.

The net debt should have continued to reduce at the rate of around $200M a month since 30th June 2022. Higher CAPEX and slightly lower output being offset by Tolmount contribution and lower interest payments. So as we near the end of August NET debt should be around $700M.

exceeds 5% of average

The market cap is £4.31Bn or $5.0004bn. True yield to year end is $235M/$5.0004 x (365/122) = 14.06% on annualised basis.
$100M for the dividend. $135M for the committed share buybacks. The share buybacks have been curtailed by the sharp price increase which precludes any purchases so long as the price exceeds the average over the last 5 trading days. They should resume on Thursday or Friday at the present level.

*The total return to shareholder figures look really good

With good reason there is a huge focus on the free cash flow figures. A figure for up to $2bn with conservative assumptions about Brent and Gas for 2022 is astonishing. But the to shareholders and these look really good. Following the recent share purchases there are 887,317,849 share remaining. At £4,93 that gives us a market cap of £4.364 or $5.106bn. We have $135M in share buybacks to be completed before the year end and a dividend of $100M. The annualised true investor return to the end of the year is therefore $235M/$5016M x (365/124) = 13.79%. That makes the conservative assumption that no more money will be allocated to share buybacks before the year end.

I think you are right. Every bullish poster is right. The present valuation is still way off. I keep coming back to the fact that these huge cash flows are being made with most of the product hedged at extremely low prices. We know in 2024 most of the really bad hedging is over. That year starts in just 16 months. 16 months is nothing in investment terms.

Rookie both the law and the mandate prevent any buybacks at a price that is 5% higher than the average over the last 5 trading days.

I like BPs renewable investments. They are not at all priced in. But yes Looney caused the windfall tax.

And if any one wants a truly interesting alternative or addition to our recent Harbour performance (for which we all deserve mighty credit!) then I would (24/7 ramp alert) recommend BP. It completely escaped the Windfall tax. It is clearing its debt at a similar rate and has a very aggressive share buy back policy which just will drive the price up and up. The true forward yield (dividends and buybacks) is about 18%. Absolutely insane. But as we have learned the market does some times take time to wake up and smell the coffee.

The returns to shareholders between now and the year end are: $100M dividend plus $35M unspent from previous share buybacks and the extra $100M slipped in today. So that is $235M payable over 127 days. So true annualised forward yield is:

(365/ 127) x $235/ $4.897Bn (market cap) = 13.79%. Of course by the year end we will have an almost debt free company. It inconceivable that the company which for 2022 will have returned $500M to share holders ($200m dividends $300M share buy backs) will not offer substantially more in 2023. It is extremely hard to find a better investment especially now all the risk associated with high historic debts is gone. We were at $1.1Bn on 30th June 2022. We now might be around just $800M.