Member Info for Sekforde

It is good. The FCF was 10% higher than forecast in November reflecting top of the range production and lower than forecast capex. The forecast 0.6 FCF for 2026 is low because it does not include the $400m coming from the two acquisitions in early December. The forecast production is clearly extremely conservative and the assumption for gas prices below the current forward curves. So I think by the end of the year we will have FCF of in excess of $1.2bn. And then of course 2027 is when LLOG starts to deliver.

Auctus advisers have suggested that the company will have 40% of its present market cap in cash at the end of 2027. That is after paying a dividend of just under 8% per annum. But they are basing that on a completely out of date assumption for gas prices - 75p a therm. The current price is 105p. Also the forecast production figures remain very conservative. Of course the company will not just hoard cash. It will hopefully spend it on a few shrewd purchases. Plenty of upside as we put Triton behind us.

Gas is up all over the place very substantially. And with it all the forward prices. It translates into far higher FCF for 2026. Obviously the market has woken up yet and is waiting for tomorrow.

And of course the Wintershalldea portfolio is mainly gas. So higher prices should be very good indeed.

LLOG is all oil and nothing to do with gas. But the price of oil has risen by $5 a barrel since the deal was struck. It was an absolute bargain at the time and now looks even better. Tomorrow we will have the all important FCF figures for 2025 and the forecast for 2026. I think both will exceed market expectations.

Presentation encouraging. Second compressor in use in two weeks should boost Triton by up to 10k boe a day.

I am very optimistic of good news on Thursday. The company back in November re-affirmed its forecast FCF for 2025 at $1bn. But this is based on (i) an assumed production of 470k boe perday (middle of the forecast range) and (ii) capex for 2025 at $2.4bn. Production in the first half of 2025 was 488k. In July it was 491k. Much lower production in August and September dragged the production for the first 9 months to 473 boe. That was entirely due to planned summer maintenance which was completed by the end of September. So why should not production have not for the last three months risen to around 490 boe a day? If it is around 480 boe that will drag the average for the full year to the top of the range. Capex for the first 6 months was $1.1bn. For the third quarter it was $500m. The company's forecast of $2.4bn for the full year looks too high. That implies $800 in the last quarter of 2025. It will I think be somewhat lower. These two factors (top of the range production and below forecast capex) could add significantly to actual FCF for 2025. Wintershall Dea is mainly gas and we all know what has happened to UK and European gas prices in the last few days. The forecast FCF for 2026 will be off the charts!

Auctus Advisers latest projected figures for FCF following the Spirit Energy deal are: 2026 $440m 2027 $367m and 2028 $360m. That is $1167m in three years available for distribution in one form or other against a current market cap of $1067m. What better evidence could there be of a fundamental market undervaluation of the company? However, in fact Auctus Advisors have been optimistic about the price of Brent assuming an average of $68.77 for 2026 and $70 thereafter which is significantly above the forward curve. BUT they have been very pessimistic about gas prices assuming only 69p a therm for 2026 and 70p thereafter. That is far far below current spot prices and the forward curve. We are now close to 100p a therm for UK gas. In addition it is obvious (perhaps because of the Triton problems) that their figures for production are very cautious indeed - just 48,677 for 2026, 52,778 for 2027 and 48,602 for 2028. I suspect the company will forecast significantly higher production at least for this year when it updates the market on Wednesday. This will prompt Auctus to update their figures for FCF for each of the next three years.

Assuming Triton is behaving and with price of gas at above 90p a therm we could make $500m this year in FCF against a market cap of just over $1bn. That is truly absurd. All should be revealed with the trading update.

UK Gas prices soaring. up 13% today. Quite unbelievable.

Cold snap. Reserves dwindling. Much below this time last year. Very good for HBR.

Well the 150p club lives. Three paid up members Y11 (remember him?) Fogthemogg and Stupmy (a somewhat delicate and oft offended soul). But I am with Sittingduck (aka sittingbull!) and joining the new 1000p club.

Nitro. Thrilled you named a thread after me. The premise of your question is just not correct. Given the likely FCF in the first half of this year, the net debt will probably not ever exceed $6bn and will then rapidly melt away. The cost of servicing the debt is far less than the cash that will be generated especially when production reaches around 70k barrels a day in the first half of 2028. The additional FCF is 60%. The overall value of the company should have risen by 60% if the market were behaving rationally. And gas and oil prices are higher than when the deal was announced.

Can someone help? What has happened to the 150p club? It was definitely in existence and making quite a confident noise around Christmas time. Is it still functioning and does it still have any members?

I think you can make a case for prioritising debt repayment. It is just that most of it is very cheap to service. We also have this unique (but good) problem that the largest shareholder wants out. There needs therefore to be a big buyer of shares to absorb all that selling pressure.

Neversellshell. I am far from conceding that FCF will be "only" $1.2bn in 2026. (Although this itself would be remarkable against a market cap of just $4.2bn after the new shares are issued.) FCF for 2025 will I think be above the forecast $1bn. This will be attributable to production being at the very top of the forecast range of 465k-475k. (We will know in a week). Post hedging we do have to contend with slightly lower commodity prices for 2026. But against that we should have much lower capex, lower opex per barrel, lower tax per barrel and much higher production after adding Woldorf and LLOG. But if the total return to shareholders is of the order of $800m (whether dividends or buybacks) that is a return of close to 20%. A purchase of as many as $400m of shares is close to 10% of the share capital. But on my assumptions it looks very affordable. Happy to hold, earn 10% and have a 10% larger slice of the company in a year's time!

Good work Bots. And all awarded as Brent soars!

Stevo if you go to 13.00 in the 23rd December 2025 presentation you will hear Alexander Krane say that the company will be moving to a pay out ratio of dividend and share buybacks (no clarity on what that ratio would be) which would be announced on the 5th March. By 5th March we will not have received any dividend and I think we will be told then what the pay out ratio would be for the rest of the year. Paying the existing dividend of around 20p per ordinary share and then spending around $400m on share buybacks is consistent with a very substantial reduction in debt by year end. However i would be happy with a dividend reduced to $300m and $300m of share buybacks. But as you have observed yourself the debt is cheap to service and long dated.

I think there will be much more substantial share buybacks this year. I think the LLOG deal required some equity because otherwise the borrowing would have become too far above 1 x EBITDA. LLOG is worth substantially more than the $3.3bn paid because oil has risen by more than $5 a barrel and with it all the forward prices on which the deal was based. But I do not think we should issue any more shares.

Buybacks should be seen as a tax efficient way of paying a dividend. BASF have been selling shares in parallel with the buyback. They have received $47m but their holding is the same percentage as it was before.