Member Info for Sekforde

No the world is not coming to an end. People have a choice. Sell something yielding about 50% in terms of free cash flow and opt for cash earning about 1% or see the opportunity presented and top up.

I have never seen any proper evidence that they assist at all. You would have to show that traders who use them do better on average than traders who do not. I have never seen any research that shows that. I do not think there was any "support level" at 400 or 380 as opposed to 395 or 375. But each to his own. There is no shortage of views on investing.

Plebeen. Do you really believe in these charts? Do you think any thing at all can ever been discerned from a line showing past performance and thinking that that is going to influence buying or selling behaviour in the future? I always think it is such unscientific tosh. It surely does not mean anything if it reaches 392 as opposed to 395 or 397? The number just reflects the market's assessment of value at a particular point in time. It does not have some magical quality that tells you where that assessment will be in the future.

BaysilHope. I was not doing a valuation. I much prefer HBR for all sorts of reasons.

valuations

The value of the "Kit" (wells equipment tax losses etc) is HBR £3.6 bn (market cap) plus debt say£1bn = £4.6bn. Serica "kit" = £791 (market cap) less cash = £396M. So HBR kit is valued at more than 10 times little Serica. It is essentially a more highly geared company. Serica is a safer play as it has no debt and very little decommissioning liability. It has not done as much daft hedging. But both nonsense valuation which will all be sorted when both companies start gobbling up their own shares.

Sercia has £396M in cash and no debt. So at a market cap of £791M its non cash business is valued at just £395M.

I agree it will not take much. That Serica RNS did not say much and yet it lifted the shares 15% in 5 days. Anything like that from Harbour could have the same effect. But I do not advocate it. I think we should relax. There will be some sort of announcement when the capital reduction plan is approved in Scotland in July and there will be huge excitement in August when the half yearly trading figures come out and the company says it is going to start buying shares. Having owned both BP and Harbour I remember Harbour being £5.37 and BP being about £4.20. Now Harbour is £3.86 and BP is £4.50. The latter will not be debt free for at least three years. But it is benefitting from an aggressive buy back programme (amongst other things). I sold all my BP positions to go extremely long on Harbour because I just did not see BP doubling and I thought Harbour could and will. So far that has proved a very bad idea. But all really can change quite quickly. Not selling one dime until we reach £8.

Obsolete. Exactly. This will come good when the market as a whole appreciates what we obsessives have appreciated for some time or it starts to buy its own shares. We may just have to get used to a few bumps as we head towards the end of the year.

Thunder 2040. You make the case for avoiding hedging in the future. The loss made on the current hedging position is huge - close to the market value of the company. In theory absent hedging we would be above 700p. But the worst of the bad hedges will be over come the start of 2023. On the absence of a RNS I am not sure the company will have much to say. I doubt they have decided whether to invest more in the North Sea or divert investments elsewhere. The Serica RNS took me by surprise in that it highlighted just how much cash the company had in relation to its market cap.

Excellent posting by Neversellshell. And excellent news.

I struggle to see how Barclays imagines that the tax take will be anything like $2bn over 3.5 years. It ignores the 91p in the £ that will come back from bringing forward investments in the North Sea.

The company will not remain in the FTSE 100 very long unless its market cap. increases significantly above its present £3.5 bn. I am not sure this status matters very much. I doubt there will be a flurry of buying just because it has narrowly remained part of that club for now. I think it would help if the company were to be a little more forthcoming about its plans. BP announced that it would use 40% of free cash flow to reduce debts and 60% to purchase shares. I should like to see HBR doing the same. I also think it could say something about its hedging strategy now the debt is so low. Is it going to hedge at all (I would hope not) or to a lesser extent for 2024 and 2025? And does it intend to tilt away from investment in the UK as a result of the multiyear windfall tax or are the new capital allowances sufficient inducement to carry on as before? I have sold all my other positions and am hugely long with IG on this stock alone. As of today I am £151,232 down and will need the price to return to £4.36 to be at break even point. No one on this board has been able to explain how the market has arrived at such a low valuation. But on fairly conservative assumptions it would be possible for the company to purchase its entire current market cap over three years. If it eliminated just 50% of shares in three years and the market cap remained the same then each share would be worth twice what it is now. It should get cracking.

And on future prices. Those future prices are why I am so against hedging. It is crazy that the market thinks that future prices will collapse. They are as likely to go higher as to fall. But even if they turn out to be right , so what? Cash machine with no debt.

You are absolute right. I like to think I am green myself. But hydrocarbons are essential for the time being and there is no virtue in simply refusing to buy a share because it produces what we all currently use in one form or other. I do not see low prices any time soon when Russian oil is off the market and OPEC is at full capacity and ready to reduce supply if prices drop. The capital reduction plan goes before the Court of Sessions in Scotland next month. August is not far away.

You are absolutely right. It is completely bewildering. Even at 537P the shares were grossly undervalued by all conventional metrics. I do not think there is any market manipulation. I think that many have become so disheartened that they are selling at any price. But the company did not seek permission to buy shares for a joke. I am sure it will do so. And that will mark a turnaround by restoring confidence. But when precisely that will happen is any one's guess.

Plebeen Its costs of production are $16 a barrel so it just does not need to if it is debt free. It may choose to. But I would prefer to take the spot price. Super low price never last because there is a big reduction in production from Opec. Over time hedging contracts lose more than they make. It is a bit like insurance. If you can afford not to insure you should not do it. Do not give the insurers money for old rope. The hedging done over the last three years has been a disaster. It is nervous nelly behaviour and should not be encouraged.

I think we can live with that in additional tax.

Here is another possibility. HBR is taken over by BP. It actually makes sense. It can be bought for 3 months profits. BP needs to replace its Rosneft reserves. HBR is also pretty green for an oiler. Carbon Neutral in 2035. Would not mind some shares in BP or cash. And just may be the cost to BP can count towards the investment allowance.

I agree we are debt free before year end if these prices hold and the company does not increase dividend and/or buy shares. But it should both increase dividends (double?) and buy shares. I am sure it will announce this in August. The debt can be paid off fully in 2023. It is not expensive. And the nervous nelly sellers have to sorted out once and for all.