Member Info for Stevo12

Sorry - posted to the wrong thread

My value calculations are pretty similar with Soders and I have a price of 40p by Q3 which will put Harbour into FTSE100 with a valuation of £7.5b, generating a dividend of 2p per share. My key assumption which underlies the above is a medium term Brent price of $65 per barrel. If Brent price were to stabilise at $75 then the value would increase by £2.5b ($10 increase generated additional $700m of cash flow) yielding a share price of 54p. This would put Harbour into the FTSE50.

This is realistically the maximum price we can hope for. We are no longer a high risk multi-bagger, but a large, stable and well capitalised business. Oil is still a demonised sector by the ESG brigade but we need oil and gas for decades to come as part of the energy transition.

You can wish for higher but I would be very happy with a 30-50% increase in share price over next 6-9 months.

My value calculations are pretty similar with Soders and I have a price of 40p by Q3 which will put Harbour into FTSE100 with a valuation of £7.5b, generating a dividend of 2p per share. My key assumption which underlies the above is a medium term Brent price of $65 per barrel. If Brent price were to stabilise at $75 then the value would increase by £2.5b ($10 increase generated additional $700m of cash flow) yielding a share price of 54p. This would put Harbour into the FTSE50.

This is realistically the maximum price we can hope for. We are no longer a high risk multi-bagger, but a large, stable and well capitalised business. Oil is still a demonised sector by the ESG brigade but we need oil and gas for decades to come as part of the energy transition.

You can wish for higher but I would be very happy with a 30-50% increase in share price over next 6-9 months.

I believe there is a solid and relatively low risk 30-40% return on the table over the next 6 months. This will not be a multi-bagger , but we need to recognise we are no longer a high risk AIM stock but a major organisation knocking on the door for FTSE 100 membership in September.

A very different vessel than the good ship TonyD.

Whackford

The Navitas deal allows PMO/Harbour to kick out Navitas and take their place on the same terms. This would give PMO/Harbour a 70% working interest with the free carry replaced by an interest free loan. While you could look at this as a scandalous sell out by Uncle Sam, I would rather have 30% of a Producing Sealion than 40% of oil doomed to sit under the Atlantic. The upside is still substantial.

What I don’t understand is why Sam gave away the free carry on Phase 2 and some of the follow ons as not needed to make Phase 1 fly.

Melqart are due to receive a very significant number of creditor shares on 1 April in part exchange for their debt and are increasing their shorts to lock in their gains on the shares they are to be allocated.

At current share price the creditors receive 61p in cash and 44p of shares for each £1 of debt outstanding and by increasing their short they guarantee the value of the shares they will receive.

The calculation they are doing is do we sell our shares now or do we wait and try and sell post 1 April at a higher price. The decision they have taken is to try and sell some of their creditor allocated shares early and lock in today’s price. They will also get the cash early and then hand back creditor shares once received in 1 April to close their short.

Aker BP market cap is £7.5b and not the $53b noted by other posters. There are features of Aker BP that are more attractive than Harbour (their producing assets are less mature than Harbour and cost of production is lower) and there are features of Harbour that are more attractive such as much lower tax rate (particularly with Premier’s tax losses) and higher BPD.

We should achieve parity with Aker BP which would result in a share price of 40p at current oil price, but I don’t believe this will be realised until Q3/Q4 when dividend has been declared and half year results are published demonstrating profitability and cash flow of new business.

If oil price pushes above $65 then all boats will float higher.

My gut feel is that we should not expect share price to move to much above 30p on 1 April. The declaration of dividend will add to price and a solid set of results for 1/2 year to June will be final step to 40p price. A little patience is needed.

Poodle

It is highly probable that RKH will receive a favourable outcome from the arbitration, the real question is quantum. As I recall, RKH have submitted a claim for costs incurred of Approx $26m and a loss of profits of $250m. If we are reimbursed for costs plus interest (say $40m), we will end up with $20m after funders have taken their slice. This will allow Sam and team to keep their noses in trough for a few more years but provides no real capacity for anything else. We might see a modest bump up in share price. We need $100m plus to make any real difference and remember Sam and team have blown through over $250m post farm out to PMO and have now given away their $700m development carry. Meanwhile Navitas pick up 30% for free. Blows your mind.

If Harbour taking Sealion forward was a slamdunk we would be 50p per share. The market is factoring in quite a low probability of Sealion being sanctioned and while we all see it as a world class asset, we need to recognise it is not in Harbour’s sweet spot.

Harbour have only ever bought producing assets as opposed to new developments, which will have a lead time of close to 4 years before first cash flow. They have also stated that they like there to be established infrastructure. I just hope that the attractiveness of the Sealion opportunity and confidence in the Premier team to deliver an FPSO solution will tempt them.

What I am confident in is that Harbour will unemotionally rank Sealion against other opportunities available to them following the criteria Linda Cook detailed in her presentation. If Sealion makes the cut then they will invest, if not they will walk away (or try to sell). Harbour will definitely not proceed with Zama and it will be sold for best price possible.

The good news is that with the rising oil price producing assets have suddenly got more expensive.

I think we will now pretty soon after Harbour/PMO merger is completed. However we should not kid ourselves that this is anything other than a long shot. However having been on this pony for a long time now, I am firmly staying in the saddle.

Here here! Getting tedious

Gusher. ARCM are being given 500m shares on 1 April and it is the value of these shares that are worth £10m more today than they were yesterday. They will not want to buy any more shares given they will want to sell the 500m as soon as they can (subject to lock in).

The point I was trying to make is that there will not be a short squeeze as PMO share price goes up. The shorters will not need to go to the market to buy shares to close their shorts - they will just wait until they receive their creditor shares on 1 April. In fact there is a motivation to take out more shorts to lock in the gain on their creditor shares. At today’s share price, the creditors are getting back 104% of the value of their debt (some haircut) and there is a strong incentive to lock that gain in though shorting PMO. Accordingly we might see some of the shorts growing if price stays high pre 1 April.

Gusher. The Shorters are being given (traded for their debt) a huge number of shares which vastly exceeds their shorts (9:1). they are effectively long and not short and will wait to be given their creditor shares on 1 April. At that point they will hand back the shares they borrowed with their creditor shares and then look to sell their remaining creditor shares to institutions. ARCM have made over £10m this morning with the share price increase!

At today’s shares price the creditors are getting back 106p for each 100p of debt in mix of shares and cash. There is a risk that some of the creditors might try to increase their shorts to lock in the gains on their creditor shares. However there are 3billion creditor shares being issued and PMO total number of shares today is less than 1 billion. Accordingly there are not enough shares out their to borrow and short.

I am a retail bond holder and have just shorted PMO this morning via IG Index (please forgive me) to lock in the gain on the creditor shares I will receive on 1 April. I do believe Harbour will be worth 40p by Q4 and I intend to keep the shares I am allocated on 1 April. However I am concerned there will be high volatility in April/May as over 3 billion shares try and find new homes.

Gusher. No they won’t. They are being given so many new shares that they will use to close shorts.

Unfortunately 100% the opposite, the more the share price goes up the more money the shorters are making.. They are receiving approximately 9 new shares via their debt holding for every short they have open. ARCM will receive 500m shares on 1 April and are making £5m for each 1p increase in share price on their creditor shares and losing £600k on their 60 million of shorts.

Makes me sick that they have bought PMO to its knees and are making out like bandits. PMO would be over £1 now if they had completed the refinancing.

Hopefully Harbour will do better

Dividend nailed on with oil price to this level. The presentation by Linda Cook could not have been more positive about a dividend but stated that it needs to be approved by the new board once formed. Newco needs $1 bliion per year investment to maintain North Sea production at 200k barrels a FY for the foreseeable future. The combined business is forecasting to generate $2.3b of cash flow in 2020 and 2021 will be more like $3b of free cash flow at current Brent. Interest of $150m per year and minimal tax to pay, there will be a lot of headroom to pay dividends. My forecast is 2p per share for 2021 which will be about $500m and will be announced with half year results.

Case not closed yet. Rockhopper will issue an RNS as soon as they are notified.

Should be in the next 30 days.

There is also an interview with one of the arbitrators on the rockhopper case regarding the Energy Charter Treaty (see attached). Useful insight and he comes over as very pro the principal of protecting investors through independent arbitration. He also makes it clear that loss of profits is a legitimate element of a claim.

There is clearly a push by EU to eliminate arbitration for intra EU claims for compensation.
https://www.investigate-europe.eu/en/2021/pierre-marie-dupuy/

Great find mogger. The Italians appear to be hoping the ECJ rules that disputes between EU companies and member states have to be settled by courts of the respective member state as opposed to arbitration. Hopefully that ruling comes too late for our case as proceedings should be closed shortly followed by award with 120 days.

I wonder whether U.K. leaving EU would mean any ECJ ruling would not apply to Rockhopper case.

He also seems to imply that Rockhopper have overstated the costs they have incurred at €29m with majority of claim related to lost profits. I wonder what oil price they have assumed in the claim and recent price rise can only help.

Actually the shorters are making a fortune as the PMO share price rises. Why? Because they are also holders of PMO debt and are being given over 3billion shares as compared to 150 million shares shorted. As an example ARCM will receive approx 500 million creditor shares and they have 60 million shorts to close. Accordingly ARCM are making 9 times more from the creditor shares than they lose on their shorts as the share price increases.

Once they receive their creditor shares on 1 April they will close their shorts by handing back a small portion of the shares they will receive. At the current share price the creditors will receive 61p in cash and shares worth 38p for each £1 of debt. ARCM have made a fortune and huge value transfer from PMO shareholders to creditors and Harbour shareholders,

Unfortunately this is what happens when you have an inept management team who go swimming with sharks.

I can see a roadmap to 40p a share by Q4 if oil price stays at current levels.

Looking forward to growing grapes in the garden and with the rising oceans life should be good in Birminghan-sur-mer.