Member Info for Stevo12

Lundin and Aker also have a huge tax bill whereas Harbour gets to keep almost all of its profits.

Harbour market cap will equalise with Aker and Lundin but not until we have flushed through creditor shares, declared dividends and published first set of Results.

Pearls

NO risk of a predator bid as 73% of shareholders are not permitted to sell their shares.

Earliest a bid could be made would be April 22 when final EIG lock in ends.

Emerald

There are no shorts

600m shares changed hands since 1 April. A good start to clearing the 3 billion creditor shares but still a long way to go.

I still think we will get volatility in the share price as we get to the mid to latter stages of clearing the creditor share overhang. However still looking good for a bright summer. I am planning to exit before first lock ins end on 1 October, but I will then be back in during 2022 as a long term staple of my portfolio. Inflation is coming and investments in commodities provides an excellent hedge.

Really like the alignment of management and shareholder interest at harbour.

Personally I don't want harbour to be colourful, progressive or fun. I want them to be a disciplined and focussed investor in oil and gas assets, taking advantages of the majors’ current attempt to greenwash their core business. I want them to generate huge amounts of cash for the next 20 years+ and pay me substantial dividends. I don’t want management to try and do things they do not understand or have competency in. I want harbour to be a pure oil and gas play. I can invest in colourful and fun in other areas of my portfolio.

Give me a 10-15% cash return on current share prices from 2022 onwards and the share price will take care of itself. I want boring, repetitive cash flows . Investors will continue to invest in cash generative and high dividend businesses and oil and gas will be needed for the next 30-40 years minimum.

Sept 2021

We had a briefing from captain Cook and Captain Kirk 2 weeks ago. Have you watched the webcast? The impact of the creditor share overhang was discussed.

If you were expecting a daily update then I am afraid you are going to be disappointed. However, if there was a daily briefing let me put myself into Captain Cook’s shoes.

“ Dear loyal and discerning shareholders we sold another sh..t load of oil and gas today, none of our rigs have sunk and we have not polluted the the oceans. However those damn creditors keep selling their shares and until they have all p.ssed off our share price will continue to be depressed. By the way, I hold nearly 40m shares and Captain Kirk 260 million so we are as frustrated as you are, but the share price will be fine by the summer, just in time for us to start selling our shares.”

Replay above briefing every day fro next 6 weeks.

There are no shorters. The shorts were closed last week.

Sorry feeling guilty for being recalcitrant.

Market cap £3.6b and shares price 20p, so 18 billion shares in issue. However due to lock in conditions 77% of shares cannot be sold. Accordingly free float 4.2b shares.

Yes

Pearls

As one of the original creditor share overhang deniers, it is pleasing to see that you have finally accepted that this is the key driver of the share price in the short term. It looks like about 20% of the creditor shares have flushed through so far.

Pelle

Due to oil price last year, Enquest had the option to issue bond holders with more debt rather than pay interest on the bonds. If oil price holds they will have to pay cash interest in 2021.

So it might go up or down or possibly stay flat!

Pelle

The liability to BP at 31 December 2020 was $520m. This is disclosed in the balance sheet as contingent consideration. However make no mistake this is vendor finance as Enquest could not finance the purchase of Magnus and BP wanted out.

BP payment is reflected in FCF. I have not been able to get a clear view on likely 2021 FCF and likely improvement from $200m FCF in 2020. Interest bill will be $100m higher than 2020 and cap expenditure also approx $100m higher. Each $10 improvement in oil price over 2020 would add approx $150m of additional FCF.

January.

Would add that Enquest interest bill is $170m per year and also need to repay BP.

There is a risk that it could get very messy with creditors. Any company where debt is 10 times its equity is a very high risk play and exposed to dilution. Harbour net debt is 0.6 times equity value. Totally different risk pattern.

If oil stays above $65 for 2-3 years, Enquest share price could easily be back to 50p plus. However if oil drops back, Enquest is Toast and will be taken out by creditors. Harbour has relatively low debt and can withstand another winter.

January

I think you are forgetting the $0.5b that Enquest borrowed from BP to fund Magnus in determine Enquest EV,

Always good to compare notes and Please could you share your logic as to why Enquest is better value. I am invested in both but much heavily in Harbour. The one thing that Enquest and Harbour have in common is a management team who are heavily invested in their respective companies.

Oiler

Enquest is heavily indebted and is raising additional equity. However more importantly Enquest’s EV (debt + equity) is approx $2.4b as compared to Harbour of $8b. Harbour produces 5xs more BPD than enquest and is only valued at 3.3 times Enquest’s EV.

Harbour is cheap compared to enquest and other more relevant peers. Unfortunately we will not see true value until creditors shares have been sold.

I wish it were different but Mr Market disagrees with you. There is a reason that we are at 10p and that is because the consensus view of investors is that Harbour will invest their capital elsewhere, most likely through acquiring high quality producing fields from the majors. Harbour aren’t interest in the world order, their sole objective is to allocate their capital to projects which have the best risk/return characteristics to enhance shareholder returns.

Oilfred

I would wait until Harbour confirm their intent to invest or walk re FI. If the later, then I would put RKH out of its misery and distribute net cash from OM award (if there is one) to shareholders.

Of course that won’t happen and any residual cash will find its way into directors pockets as they spend 2-3 more years on high salaries as they scour the world to find a new cash rich investor.

I am hoping the alternative pans out and Sam is carried on our shoulders through the streets of Salisbury as first oil flows from FI and RKH market cap exceeds the value of Bitcoin and Tesla!

A little worrying the share price has dropped on what has been a relatively slow day for Harbour Share volumes. Given oil price improvement, There must be a large sell order waiting to be filled.