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It will not be possible to spend the remaining mandate sum in just 7 trading days. But I remain intrigued. Morgan Stanley were given a mandate on 20th June 2022 to spend $200M by 31st December 2022. They have blown (almost) the lot in 8 weeks. Why? I think perhaps they were told by the board that it wants to have the chance to spend another $200M before year end. All will be revealed soon.

In fact a further 708,058 shares knocked out today. Just over S3.3M spent.

Since the share buybacks were commenced in late June 35,010,125 shares have been purchased out of an original total of 925,533,660. That is 3.78% of the share capital. The existing mandate is $200M by the end of the year. Approximately $147M has been spent already. Assuming that purchases continue at the yesterday's rate (599,688) another 4.2M shares should be eliminated at a cost of approximate $19.3M. In other words by the 25th August 2022 all but just over $30M of the original mandated sum will have been spent with over 4 months of the years to go. The forecasted free cash flow made by the board in May was between $1.5 and $1.7 bn. But that assumed Brent at $100 per barrel average and Gas at $200 a therm. Since the end of March Brent has averaged $113 per barrel and gas more than $260 a therm. For Brent to average $100 by the end of the year it would have to average $87 a barrel and gas would have to average less than $150 per therm NOT the $400 plus a therm we have seen over the past few days. The board promised that if prices remained elevated it would look to increase shareholder returns at the half way stage. They have remained more than elevated. There is enormous scope to both increase share buybacks and increase dividends. But the present dividend yield alone is presently 4.95% $200M/$4.1Bn. if you include present share buybacks (which are the equivalent of dividends) the present yield is 9.9%.

Buy backs today were curtailed by the surging sp . Nine trading days to go. BP surging in New York. I am topping up again tomorrow. No fear. Has to be done. And then long long hold. Who is selling at this crazy low price? Not me.

My forecast below which was pushing the boat out is beginning to look conservative! I am finding it hard to calculate 1st half with any precision. Brent in second quarter was $114. But actual production of gas and oil not certain.

Forecasting competition announced.
Debt 30th June $1bn
Forecast Free cash flow 2022 $2bn
Dividend $300 M per annum. $150 M second half.
Share buybacks $200 M extra by year end.
At least one mega announcement.
Share price at close on 25th August £451p

Then we should just keep buying ahead of the results. They did wonders last time.......

But onedb how much is unhedged? Therein lies the tragedy of nervous nelly hedging.

Also I doubt there will be any buybacks announced today as price more than 5% above 5 day average. Shows that fresh buying from real investors has taken this higher.

Few things irritate me more than the notion that anything can be discerned from looking at a graph of past performance. 200 day moving averages, break out points, candlesticks etc are all for me complete tosh. I think what really matters is a rational assessment of future earnings against market cap. Even after the little rise this morning on the back of Goldman Sachs stating the bleeding obvious (for whose research on the subject no one should pay a penny) this remains simply astonishing. The free cash flow for 2022 after tax buybacks and dividends will be close to $2bn if gas and oil remain at their current levels. And why would free cash flow not be more in 2023 with no or very little debt interest to pay, higher gas prices and fewer bad hedges? And as for 2024, all the bad hedging will be pretty much over, there will be no debt at all and it may well be we should have some truly astonishing finds? And then 2025. No debt. Greatly increased production. No bad hedges. Progress on the carbon capture investments. It is not at all impossible that free cash flow (after tax dividends CAPEX and share buybacks) over just 2 years will match the market cap and over 4 years will be twice the market cap. The results will be significant because they will show that this is a real possibility. Anywhere close to my bullish forecast should be fine. Ten times free cash flow is a reasonable valuation. The market cap should on that basis be $20 bn and not $4.2 bn. Any way we are heading straight back into the FTSE after 25th August 2022.

We are heading relentlessly towards a potentially explosive day. I am no longer a fan of debt repayment. But I think that will have happened almost by default. And I think the debt could have fallen by $700M to $1 bn by the end of June. I base that on the following factors: (i) the reduction of debt by $600M in the 1st quarter. (ii) An increase in CAPEX on the 1st quarter. (iii) Average Brent prices of $114 per barrel during the 2nd quarter. (iv) Totally insane gas prices. (v) No reported outages. (vi) Share by back only beginning on 16th June 2022. Of course we will then all conclude that by end of August 2022 debt could be around just $600M. But having successfully deleveraged in this staggering way the market will be told of planned future rewards for long suffering shareholders and major increases in investment. That could be really positive and my finger keeps flickering over the buy button. But I am hugely long already and this has been quite a roller coaster.

Hedging is a seriously bad idea. The forward prices are much lower than the spot price and so hedging locks that in. It gives certainty but at the expense of a lot of profit thrown away. With low or no debt we just have to run with the hounds.

There will be deals done at some stage. All the oil companies are paying off debt at a rate of knots. And BP definitely wants to continue investing in hydro carbons as it transitions to renewables. "Performing whilst transforming" .

One of the questions asked at the BP conference was "what are you going to do when the debt is paid off"? No real answer other than "we want to strengthen the balance sheet". BP reduced its debt from $27.5bn to $22.8 bn in one quarter so it too could be debt free in 2023. It will then be left with a head ache of what to do with its surplus cash. It could buy Harbour. It would make a good fit. They have joint interests in Timpam and there would be savings in the North Sea. Also Harbour is actually planning to be carbon neutral in 2035 (BP 2050) so consistent with BP's green objectives. The great advantage would be not just the physical assets but the people that would be acquired. Bp has moved much higher today on its results but Harbour's will be just as impressive. I have gone over BPs numbers many times. It is also really cheap and there is less risk in that it is a more diversified company. But in terms of free cash flow against market cap Harbour is even better value. Our free cash flow could be $4bn over the next 2 years and that is greater (just) than the present market cap.

My 101 year old grand mother telephoned this morning to ask what I thought of the BP results and to ask whether I thought it fair that it should be making all those profits when people are suffering. I did have to bite my tongue as when I last looked she had a big chunk of BP in her extensive portfolio and certainly is not suffering herself. Bp's results are a harbinger for Harbour's and I am looking forward to the presentation from Looney which is always upbeat and reassuring.

I was a big fan of paying down the debt as of course it was excess debt that brought down Premier Oil. But actually it now makes no sense at all. Harbour's debt is already tiny. $1,000 spend paying off debt saves $50 interest a year. $1000 spent investing in the North Sea saves $910 in tax in year one and creates an asset that should produce an income after tax of $200 a year. I think there will have been a big pay down of the debt since the end of March and it could as of end of July 2022 be around $1bn - even with extra CAPEX in the second quarter and the payment of the dividend and the share buy backs. A debt of $1bn is the same as little Enquest which has 20% of the production of Harbour. A debt of just $1bn does not need to be reduced further. I would favour upping CAPEX in the North Sea to $2bn a year, upping CAPEX elsewhere to $0.6bn a year (total additional CAPEX cost $1.2bn), doubling the dividend to $400m a year (additional cost $0.2bn) and increasing share buybacks to $400M a year (additional cost $ 0.4 bn) All that can be comfortably afforded from the likely free cash flow and neatly mitigates the windfall tax. Just using free cash flow to pay down debt is intellectually lazy and unambitious. But I am convinced that the news on the 25th August 2022 will drive the markets wild with excitement. The days of frustration and misery are surely soon over.....

The last trading update did wonders. I keep returning to the forecast $1.5 to $1.7 bn free cash flow for 2022 after payment of the dividend of $200M.
That was based on the price of Brent averaging $100 a barrel for the year. Well seven months into the year and we are averaging around $107. AND gas not far off double the assumed price. So even taking into account the money spent on those cheap cheap buybacks we could be heading for free cash flow of more than $2 bn for 2022 even with all those bad hedges. No need to pay off debt - just reinvest and avoid the windfall tax. And keep the share buybacks going at the present stonking rate. But to pretend a market cap of under $4bn makes sense is just risible. $10 bn would be dirt cheap.

laidback. Your interest rate calculations may be too high. If average debt over the year is say $1.1bn then at 5% per annum (average borrowing cost) the interest charged should be more like $55M. But no particular virtue in paying down debt so rapidly. Better by far to increase share buy backs. The rate of buybacks well above what it needs to be to spend $200M by year end. Suggests more to be announced after results in August.

Something is happening. The rate of share purchases is being maintained at an astonishing rate. 1% of the company's shares purchased in a matter of days. But how many weak holder ate left? The dead wood is being cleared and no one should settle for this (still) insanely low valuation.

Sorry error made $1700M a year for 10 years using a discount rate of 5% is $13.126bn! Not $8.6273 bn.