Member Info for Sekforde

All depressing news in terms of what really matters. However the weekend markets show oil up 10% in the spot markets. If maintained could easily see 270p or more opening on Monday. Goodness only knows what the company will say on Thursday. All their previous forecasts will need revisiting.

The production in the second half of 2025 was 38k a day. BUT we have been promised a 25% compound increase per year to 2028. So this year 45k a day. $12 opex and 23% tax and $14 extra a barrel since the contract was signed. Linda you are a genius.

NSS I agree. There is nothing whatever to be gleaned from looking at a chart. It is just tedious nonsense. Price movement is all about the company's production performance and commodity prices which in turn reflect the market's assessment of future supplies and the risk to disruption.

Tokugawa. Greetings from London! On the basis of the EPL being scrapped on 1st April 2026 my estimate is as follows at $70 Brent. Harbour's current adjusted estimate $750m (excluding Waldorf and LLOG.) plus say $200m extra from scrapping EPL (see Stevo below) Waldorf (gross income $70 x 20k x 365= $511m less say $20 opex etc per barrel (no tax) 20-x 20k x 365 =$146m) $365m. LLOG (45k x 66 x 365 = $1.084bn less capex $300m less opex $197m less additional interest say $150m less tax $100m) $337m. FCF is $1.652bn. More in 2027 as LLOG ramps up.

I think the EPL really is going to end early. The treasury would not have three weeks of "intensive meetings" and then do nothing. The financial logic is overwhelming and it will not result in an overall loss of tax revenue. It will however add at least $250m a year to FCF which should add at least $1.5bn to market cap from the current valuation. That would make the company a candidate for automatic promotion to the FTSE. After this morning's rise we are about the 102 most valuable company. We need to be in the top 90 to qualify for automatic promotion.

At some stage the market must wake up to the fact that Brent is now at $72 and all the forward prices are higher as a result. One could easily justify a market cap of $8bn or more.

We have not been told what the expected FCF of the amazing LLOG deal will be beyond that it will enhance it over the period 2026-2030 by 60%. However that figure was based oil a full $9 below its present value. Because LLOG is in a low tax region higher oil prices enhance disproportionately its contribution. For this year I calculate FCF as follows: Production average 45000 boe per day. (36k 2025 but 25% increase promised per annum. Gross revenue 45,000 x $64 x 365 = $1.051bn. Less opex $197m ($12 a barrel) less capex $350m less additional borrowing cost $162m ($2.7bn at 6%) less tax $100m - FCF is $242m. The board said this would generate additional FCF per share in 2027. But it happens much sooner because prices have improved so much since 22nd December 2025. Using the board's forecasts we have $700m from the pre- LLOG portfolio, $100m for 2026 Waldorf production, $400m from the two earlier December transactions (consideration and release of trapped cash). This comes to FCF for 2026 of $1.442bn. The company can pay a slightly reduced dividend, resume and maintain buybacks, and pay down a significant amount of debt.

Production was 34k in the first half of 2025. It was 36k for the full year implying it was 38k in the second half. Should be now around 42k pr day.

Nitro. Not funny. Sexist and stupid.

All consistent with a 25% annual increase from first half of 2025. LLOG is an absolute gem. Oil prices up $8 since we did the deal and all that extra revenue taxed at just 23%. This revenue belongs to Harbour from 1st October 2025 and will be coming off the cash that is ultimately paid at the end of March.

I think there will be a cut in the dividend. But it simply does not matter if the buyback programme is restarted. BASF want to sell their stake and will therefore favour buybacks over dividends. What matters always is FCF. If you include the new acquisitions the FCF is likely to exceed $1bn this year and will rise in 2027 and thereafter as LLOG contributes more and more. For every £1 invested generates over 20p in FCF and rising over time. Cannot myself see the attractions of holding cash (generating around 4p for every £) rather than harbour shares - unless you think commodity prices will collapse. Goldman Sachs have assumed or predicted a collapse but I prefer to look at the forward curves which enable Harbour to lock in FCF by hedging.

In August 2022 GS rated Harbour a buy and gave a price target of 609p. Clueless and dead wrong.

With the new shares added in March, the current valuation is $5.13bn. The forecast $600 FCF was based on midpoint production and $65 Brent and $11 gas. The sensitivity was $5 brent and $1 gas = $150m for each. So we need to add $300m already - using the current prices and the forward curves. Then we have to add $100m for the production figures being clearly too conservative. $100m for Waldorf production and $200m for LLOG (at least and this year). (I ignore the $400m from the two pre-LLOG December transactions.) So that all adds up to $1.3bn FCF this year. With much more to come in 2027. $5.13bn is too low. The current dividend is affordable. But share buybacks much better. And we do not need to worry about the cheap as chips debt.

Stevo I have heard back almost immediately from SF. He says tax is distorted because of the recent acquisitions. He then set out some detailed calculations. He said for 2026 FCF (on the assumptions used for production) would be $365m at $69 oil and 75p gas. Or $325m at $65 oil and 75p gas. So essentially he is confirming what is in the published report.

Stevo Serica pays auctus advisers to provide these forecasts. Serica wants the market to have accurate information that it hopes will encourage investment in the company. It relies upon Stephane Foucard to calculate FCF based on figures the company itself supplies. I emailed Stephane Foucard back in September and asked him to do the modelling but with lower assumptions about brent prices and he sent back some revised numbers immediately - copying in Andrew Benbow to his email. I think these really are the company's numbers with the only "independent" assumptions being future price of gas and oil. So the tax forecasts are implicitly endorsed by the company itself. Tax is hugely complicated as you know. I wonder if this is a timing issue with tax in effect being paid in 2027 on 2026 earnings. Of course a large chunk of production from the Spirit Energy acquisition will not be subject to any tax at all. I would not have thought there is anything to be gained by permitting "paid for" forecasts to be made which are wildly inaccurate.

Yes effective date is indeed 1st October 2025. So after that date all earnings accrue to Harbour.

Stevo. Auctus has assumed $68.77 for oil (which is too high) and 75p a therm for gas (which is too low). But using these figures they have a FCF of $321m for this year. Using similar assumptions for 2027 they have FCF of $457m for 2027. I take your point about the tax shelters for part of Serica's production (although Harbour now has Waldorf) and the debt interest but Harbour's costs per barrel are lower and I still find it hard to understand why Harbour's forecast FCF is so low.

Neversellshell. The production at LLOG was 34k in the first six months of 2025. However Nigel Hearne stated in his section that it would increase by 25% per annum (compound) to double production by 2028. So assuming 25% growth is achieved from the first six months of 2025 to the first six months of 2026 that would take us to 42500. Using this figure for the whole of 2026 and assuming that the production sells for an average of $62 per barrel that would give a gross revenue of (62x 42500 x365) $962m. From this figure needs to be deducted capex of say $350m and opex of $186m (using the published $12 a barrel) and interest on the additional borrowing of say $150m. That is $426m. The tax rate is 23% and I assume that interest cannot be deducted. Tax may be around $150m. That is FCF of around $274m from LLOG this year. Have I left any thing out? I appreciate that the transaction is not due to complete until March 2026 but the effective date is 1st January 2025. The headline figure of $2.7 bn payable in cash will have to be adjusted to take account of cash generated since 1st January 2025. So I do see a good contribution this year to FCF from LLOG. The company did suggest that it would be cash accretive per share in 2027. That was of course before the $7 increase in the price of oil since 22nd December 2025.

Stevo I am still struggling with a FCF of just $600m for 2026. I know you follow Serica as well. Auctus advisers have FCF for Serica at over $300m for 2026 on a production volume of just 10% of Harbour's. Harbour's opex per barrel is lower and its hedging book better. I appreciate that there is above $300m Capex needed at LLOG to boost production but it is already up from 34k to 42.5k per day. Opex is only $12 a barrel and the tax rate is just 23% so my maths suggest some FCF from LLOG this year. As always we just have to wait and see.

I claim huge credit for being right about the FCF for 2025 and the production being at the top of the range. BUT my own forecasts for FCF for 2026 were way off. I was expecting a forecast of at least $1.2bn and may be more. However, I am hopeful we may yet get close. There are three things that the latest update needs to be adjusted for. First the production forecast for the existing portfolio is very very conservative. In the first 9 months of 2025 the reported production was 473k boe a day. We now know for the full year it was 474k a day implying production in the last quarter averaged 478 boe. That is just 10 boe below the first half of 488 boe a day and that first half was with the Vietnam production now transferred to Enquest. This implies decline is limited and I would guess we will be at the top of the new range again. Second Waldorf. I do not know what the FCF from these assets will be. But when they come across it is 20k boe a day with very little tax to pay on the margin. Third LLOG. Yes we will have to borrow around $2bn to acquire it and that will cost around $120m a year in interest. But there should still be some FCF generated in the last 9 months of this year. So one way of the other I think we could still get to FCF of at least $1bn. 2027 looks much better.