Member Info for Stevo12

A bit late to sack him now - the damage has been done. Our future is in the hands of Harbour and Sam has no influence or input. He is as much along for the ride as we are.

The recent option award is a scandal.

Big swing coming over next couple of years from growth to value which will be amplified if inflation starts to take hold. Returns over last 5 years have been great for growth shares (mainly tech) next 5 years will be commodity based and financials. So some of your portfolio is looking good for next 5 years. Oil and gas should do very well and really like the look of new PMO post merger alongside Total, Shell and BP. However RKH is gamble and not an investment.

For me RKH is my little folly and everyone needs to bet with their heart occasionally. Come on the Rock!

I am actually both. I shorted the creditor shares I am due to receive in exchange for my retail bonds to lock in a price of a little over 30p. I also have a normal LTH through my pension and ISA.

I will close the short on my creditor shares during a dip in April or May.

Overall I am very much pro the long term prospects of Harbour but wanted to protect myself from short term volatility post 1 April. I see that that the shorts have risen again over last couple of days and looks like others are deploying the same strategy,

Need to keep away from hedge funds. We need long term institutional investors looking for yield.

They have indeed demonstrated great solidarity during the darkest days of Covid. As the days get lighter, this solidarity will be tested and history teaches us this is a very fragile and self interested alliance. Expected OPEC to break ranks as they try and secure market share for 9 million barrels pd of oil currently held of market.

However I am planning on ignoring short term volatility in 2021 and focussing on long term fundamentals. Oil is needed in huge quantities under the most aggressive energy transition predictions and supply is not being sufficiently invested in. My personal view is that O&G and commodities will provide very solid investment returns over next decade.

We still have 9 million barrels of Middle East and Russian oil being withheld from market and quite frankly I am amazed at solidarity to date. Demand needs to come back on line (particularly aviation) and third Covid spike in Europe as British Covid sweeps through an unvaccinated population is bad news for demand (who said we would not be able to export post Brexit).

Accordingly there ais going to be some volatility as 9m bpd of supply and demand returns to market. There is going to be a hell of a fight among OPEC+ to grab that market share as it returns. Please do not be seduced into think oil is on an upwards only trajectory in short to medium term. However looking into Fy22 and fy23 there is a probability of supply not being able to keep up with demand and prices will likely be in $70+range. Shale oil will again become the marginal barrel that will stabilise prices.

There will be other opportunities in April and May to buy into dips and like Soders I believe in the fundamentals.

Ore shorts over the last few days which is good as creditor shares being sold in advance of 1 April which will reduce the overhang. Positive that 10m of additional shares shorted has not had negative impact on share price - another 3 billion to go!

Gusher

My assessment is that at $55-60 oil, Harbour shares will increase to 40p (£7.5b valuation) to be at par with their peers. My view is that harmonisation will not achieved until Q3 when half year results are published, dividends confirmed and our place in FTSE 100 confirmed.

If medium to long term oil prices move up then all oil company valuations will rise. Each $10 increase in oil price should be worth 15p per share for Harbour. While current oil prices look positive there are still some downside risk and I think it will be early 2022 before we see the fundamentals of the oil market stabilise.

Accordingly my personal expectation is 40p by July 2021 and 60p by March 2022 if oil price stabilises at $65 pb and 75p by end of 2022.

Not the case citizen. The agreement requires premier/ harbour to take over the Navitas interest. Accordingly Premier will have 70% of Sealion and will be 100% responsible for development costs via an interest free loan to RKH.

Sam has given away 10% interest in Sealion, $750m free carry and big slice of other licences in exchange for an interest free loan. Worst deal in history. Yes I fully agree that 30% of something is worth more than 40% of nothing, but no need to give away carry on phase 2 and other licenses for no consideration. Giving away carry on phase 1 sensible to get game on the road but phase 2?

Premier has written down its investment in Sealion Phase 2 but has retained the carrying value of investment in phase 1 which is positive.

The merger will be accounted for as a reverse tax over which will result in Chrysalor / Harbour assessing the fair value of the Premier assets it is acquiring. This will result in the deferred tax assets written off by PMO being reinstated. It will also fair value the investment in Sealion which will be dependent on their decision to invest or walk. However this decision will not be public domain until 1/2 year results are published in early summer.

I am still rating the chance of Sealion being sanctioned as 5:1 ,but if Harbour sanctions Sealion we will be at 50p in a heartbeat. RKH should be considered by all investors as a high risk bet which is fine in a balanced portfolio.

Had a good read through the full Premier and Chrysaor announcement and I am generally encouraged. Combined EBITDA for FY20 is higher than I expected at $2.4b and production forecast rates for FY21 at 200-220k bpd as expected. As importantly the exit rate at end of FY21 is forecast at over 230k bpd. Debt lower which is positive and reflects Q1 oil price - this is mostly contributed by Premier who are largely unhedged.

Looks like a conservative assumption on FY21 oil price by PMO at $55 pb which is driving impairment of Solan and tax assets. The tax assets will be restated by Harbour on 1 April.

Harbour Hedging for FY21 looks conservative based on current oil price but it guarantees the group strong cash flow for year to fund investment and dividend and, given there is still lots of uncertainty in FY21, I am very happy to have that level of hedges. The Valuation of the group will ultimately be driven by long term oil price expectations not short term hedge prices. I don’t think we will see stabilised oil prices until late FY21 or early FY22.

Overall happy with combined statements excluding the burning angst that PMO sold out too cheaply. How hum.

I am not sure many of you have watched the life of Brian!!

Gusher you are correct in your understanding of short selling. The difference here is that the shorters, because they are also debt holders will be given lots of bananas in exchange for their debt. Accordingly they do not need to go to the market to buy bananas to hand them back 9close their shorts). By increasing their shorts now they are selling in advance more of the shares they will receive on 1 April and guaranteeing the share price.

Also there is no difference between the current shares of PMO and new shares to be issued on merger. All that is happening is a name change.

Hope this helps

What did the Romans ever do for us....

SmallT

I think you are crediting the analysts with a greater understanding of the fundamentals of the merger. An informed note from Stifel which pretty much mirrors Soders earnings forecast (well done Soders). The debt forecast is a little lower than expected but with current oil price, debt will be falling radically ($100m per month). I don’t believe Stifel have factored in a dividend payment to debt forecast, so more like $2b (compared to combined debt pre merger of $3.2b).

On creditor share overhang, there is the potential for a lot of volatility in early months. Company will be trying to place these shares with institutional investors but I suspect the big demand will be post the FTSE100 assessment at end of Q2. Once it is confirmed Harbour will enter FTSE in Sept/ October there will be a massive demand for institutions.

LTH need to sit tight for a couple of months. Huge opportunity for traders to make a few shillings.

Very lazy and uninformed analysis that looks at PMO “as was’ not “as is” post merger.

I suspect that pmo will not say much about current trading ,but must be kicking off huge amounts of cash at these oil prices. Combined debt will be below $3b and falling $100m per month.

The ban, which is only being considered, is to not issue new licences from 2040 onwards. I think by then the majority of viable oil fields in NS will have been sanctioned and most of them exhausted. Who knows what the political and economic environment will look like in 20 years time but we will not be importing oil and gas into the UK and leaving resources in the ground in NS. The challenge for the UK is can we diversify away from fossil fuels by 2040, not should we extract it or import it.

By the way most forecasters are predicting only a modest drop in oil demand by 2040, although oil will make up a significantly lower proportion of the energy mix as world energy demand rises.

Ultimately tullow was able to refinance and PMO were not. Tullow remains a high risk, highly leveraged business and its share price has a much higher beta to oil price movements. PMO is about to become a large multi-£billion, relatively low leveraged and low risk business. Our share price movements will have more in common with BP and Shell than Tullow and Enquest.

I see that shorts have increased over the last couple of days. This will be contributing to the share price weakness but as we have previously discussed, this is purely creditors locking in profits on the shares they will receive at end of month.

I will eat SK’s hat if these shorts do not close in the first week of April as creditors hand their borrowed shares back. We need to be prepared for significant volatility as creditors sell their holding (either by shorting now or selling in April/ May). I am principally a LTH but would appreciate thought and guidance on how to trade this volatility.

I have applied for 200,000 in addition to the creditor shares I will receive as a retail bond holder. Not holding my breath but at 8p would be huge bonus.