Member Info for Sekforde

The company should have offered to buy the shares at 260p. Just 30 days FCF at the moment.

I have relistened to the Krane's projections on FCF. He is basing his forecast of $1.4bn on what he describes as the current forward curves for gas and oil. He suggests based on those curves Brent will average $75 and gas will average $14 in 2026. Hence he is able to add (2x 170 and 3x 150) to the base figure of $600m. However he is being a bit cautious. The current forward curve shows that the average for Brent will be $80 and the average for gas will be $14.5 So there is a further $245m to add.

A placing usually occurs where a seller needs the money quickly and cannot afford to drip feed the market. Why else take 255p when yesterday there were buyers at 281p and the company itself will be a bug buyer later in the year. But the fundamentals have not changed. The company is capable of generating $1.4bn a year for each of the next 10 years and so it is just not worth $5.4bn.

This is plainly a forced sale. But to repeat we have been promised 45% of the company's FCF for this year. So given the forecast $1.4bn FCF, $630m will be paid to shareholders or $330m more than the announced dividend. The additional money will be spent mainly if not entirely on a share buyback program which will soon reverse this latest nonsense.

At $75 brent and $13 gas (averaged for the year) the company's forecast FCF would be: $600 plus (2x $170m) $340m and (2 x $150) $300m plus $400m for December transactions = $1640. Ignoring the $400m at 50% distribution $620m should be paid to shareholders. That is $320m for share buybacks (the intelligent way to reward shareholders) later in the year.

Serica will have no net debt by the end of April of this year. Using the current forward curves for gas and oil it will generate its entire market cap in the next 30 months. It knows the North Sea and is almost uniquely well placed to take advantage of the relatively low prices in the UK compared to equally high taxing Norway. At some stage the experiment with overtaxing UK oil and gas companies will be abandoned.

Asartara. In the presentation last Thursday Alexander Krane indicated that FCF for this year would be $1.4bn using the then forward curves for gas and oil. That takes into account the now unfavourable hedging on part of the production. Since Thursday the forward curves have risen again and using the company's own sensitivity metrics we should have an additional $300m this year. None of this takes into account the $400m we are due to receive from the early December 2025 transactions. And it assumed the midpoint for production in the range 485k to 500k. The board is clearly being too conservative on that because we have averaged 509k barrels in January and February with only one month's contribution from LLOG and nothing yet from Waldorf. So this year I am expecting to have FCF of well over $2bn. The presentation does show the $600m (based on $65 brent and $11 gas) rising to $1bn in 2028. So regardless of what we achieve this year the trend should be upwards.

Asatara. The number of voting shares in issue is 1,579,724,339. When calculating market cap non voting shares are usually ignored.

Harbour is the 84th most valuable company by market cap. So we will be in the FTSE by June.

Company stated fcf for 2026 at $65 Brent and $11 mscf = $600m But + $5 Brent = $170m and + $1 gas = $150m.

Assume brent for 2026 averages $85 (current $92) and Gas $18 (current almost $20) FCF for 2026 = $600 (plus $850m and plus $1050m) = $2500m.

There does not appear to be any net contribution to FCF from LLOG this year. But it adds over 60% over the period 2026 to 2030. I do not think it wild to make any of the assumptions I have and I am simply using the company's own figures to do the maths. The extraordinary truth is that 2027 and 2028 are materially better than 2026 because of the additional contribution from a low tax producer (LLOG). The market has just not done the maths. $6bn is just not a realistic valuation for a company that could be on the cusp of huge earnings.

I do not agree with the idea of no buybacks. Using the company's figure offered in the presentation FCF will be $1.4bn this year on the basis of yesterday's forward curve and the midpoint of production. So $300m dividend and $330m buybacks and $770m on debt reduction is what I would suggest. Buybacks are so much more tax efficient then paying a dividend which attracts a tax rate of around 40%. The company has said it will pay 45% of FCF to shareholders this year. The net debt will be around $6bn at the end of this year after taking into account the proceeds of the two December transactions. That is really very modest given the size of the company. Because production will be above the midpoint range and the forward curve has improved further this morning the actual debt reduction should be greater.

Asartara. Please go to the company's presentations. Alexander Krane gives the number based on the forward curve in the morning. It will hardly be reported because only 400 people ever follow the presentation. And the forward curves have spiked up tonight even further. We have a chance of making quite close to $2bn this year. This company is absurdly cheap but very few people have done the maths.

I do not buy the forecast that the company will only make $1.4bn FCF this year based on the present curves for oil and gas. It will be more. It will be well above its cautious production forecasts and it will do better than forecast on its costs reductions. We will end the year averaging well above 500k boe a day. By year end LLOG should be contributing nearly 50k a day. Hard to buy at 285p if you are a founder member of the 150p club but the company remains cheap.

The mantra I hate most is "It is never wrong to take a profit". It is often extremely wrong when a share remains fundamentally undervalued. This is the position with Harbour. It is still worth less than $6bn which is far too low. It is odd that the company was so cagey in its actual results about what the true FCF will be at current prices and yet gave us the figure in the presentation. The $1.4bn is in a year where LLOG appears to be contributing very little to FCF partly because of the scale of investment ($400 capex) this year. In other words if FCF is $1.4bn this year it ought to be more next year and the year after. One cannot sensibly value a growth stock at just over 4 times FCF. We now have a market cap ranking (89) where if maintained we will automatically be promoted to the FTSE 100.

The most interesting remark came from Alexander Krane. He stated that the FCF for 2026 using the current forward curves for oil and gas would be $1.4bn. That would imply, using a pay out ratio of the 45%, investors receiving $630m in distributions (whether dividends or buybacks) and the debt being reduced by $770m. He also stated that the company had been actively hedging this week which means locking in part of the forward curve prices. The $1.4bn does not include the money coming from the Indonesia sale or the Waldorf transaction which add $400m. And I appreciate that we have only had 2 months of production but at 509k per day we are well ahead of where we need to be to reach the mid point of the production forecast on which all these figures were based. Also the board indicated that but for present war the UK government would have implemented the replacement of the EPL with the much better and fairer system. It may still happen if the war ends soon and the Strait of Hormuz is re-opened.

Gas prices are 154p a therm. So roughly double in a week. And we produce a lot of gas.

The market is refusing to do the maths. What matters is free cash flow. At $65 brent and $11 mscf the company disclosed that we make $600m in 2026 on the old (pre Waldorf and pre LLOG) portfolio. BUT there is a $150m sensitivity per $5 plus Brent and $150 per $1 plus gas. Assuming for 2026 Brent averages $80 (already looking conservative) and European gas averages $15 then the FCF on the old portfolio rises to $1650m. (3x 150 and 4x150). We have $400m net from the two December transactions. Plus we have AT LEAST $200m from Waldorf production and AT LEAST $400m from LLOG. SO FCF this year is $2650M. Let us say $2000m and value the company at 6 x FCF (which is not demanding in view of LLOG's increasing production and low tax regime) we should have a market cap of $12bn not significantly less than $6bn.

I can not imagine how it makes sense to sell just because the sp has risen. The company is making a simply insane amount of money at present commodity prices. It could generate its entire market cap in the next 24 months in fcf if anything like the present prices of commodities are maintained.

The share price reaction to the huge increases in both gas and oil prices is really very limited. Hbr is heavily geared which magnifies the effect of higher prices. Using the company's own figures of $600 fcf for Brent at $65 and gas at $11 msfc (plus $150 for $5 brent and plus $150 for $ gas) we have more than double that on the pre- LLOG and pre Waldorf portfolio. And as to our prospect of joining the FTSE 100 we are now the 92nd most valuable company by market cap.

Anyone recall Goldman Sachs and its prediction on oil prices?

I do not think the Strait will be closed for long. And I suspect that the price of oil will settle down. But they have proved dead wrong.