Member Info for Tamovv

Thanks kign!

So, applying your assumptions leads to:
Rosebank: 240 million barrels, thereof 40% = 96 m barrels
Buzzard: 20 m barrels left, equals 100m "2c barrels"
-> approx. 200 m barrels in 2c quality in total, so $/boe "2C" purchasing price even lower with $4.

Comparing this to the Siccar Point purchasing price ITH payed before WFT introduction, feels like EPL crippled 2C value in the UK north sea environment SIGNIFICANTLY.

Thanks! This basically means 1b USD for 40% Rosebank, 30% Buzzard and a bunch of tax losses, am I correct?

Rosebank: 240 million barrels, thereof 40% = 96 m barrels
Buzzard: 156 million barrels (2007), my estimate is that reserves should stand at like 14%, so like 20 m barrels left.

If we assume 20% of the purchasing price can be allocated to the tax losses, around 800 m will be payed for 116 m barrels, so around 7 USD/boe.
Seems pretty low to me, is this some metric we can use for peer valuation?

PS: not sure about simple adding the undeveloped reserves of Rosebank + remaining reservers Buzzard (production rate sharply declining). I am new to O&G, so maybe I am adding apples to pears...

Source: https://www.spglobal.com/commodityinsights/en/ci/research-analysis/francois-blin.html

@Stevo what do you think of the article? Is this tactics of Ithacas board?

I mean, as you have described, the investment allowence reduces investment risk SIGNFICANTLY whereas also turned North Sea investment projects into lower profitable ones (high risk high reward -> low risk low reward).

So the overall "financing" shouldn´t be a big deal, because, if I recall you correctly, the allowance can be drawn against due taxes in the very same year, so the investment CF comes from non-spent taxes as part of the OCF or not?

@Stevo what do you think of the article? Is this tactics of Ithacas board?

I mean, as you have described, the investment allowence reduces investment risk SIGNFICANTLY whereas also turned North Sea investment projects into lower profitable ones (high risk high reward -> low risk low reward).

So the overall "financing" shouldn´t be a big deal, because, if I recall you correctly, the allowance can be drawn against due taxes in the very same year, so the investment CF comes from non-spent taxes as part of the OCF or not?

Source: https://www.investorschronicle.co.uk/news/2023/02/28/windfall-tax-puts-cambo-decision-in-doubt-ithaca/

Might be interesting for HBR investors as well: https://www.investorschronicle.co.uk/news/2023/02/28/windfall-tax-puts-cambo-decision-in-doubt-ithaca/

So roll back this fkn stupid WFT!!!

Source: https://www.reuters.com/world/uk/uks-hunt-has-extra-30-bln-pounds-play-with-march-budget-ifs-2023-02-28/

Hey guys,

First of all many thanks at Megla, Sekforde and of course Stevo for all the constructive posts and open sharing of calculations / models.

In my model I get to lower WFT-charges, because I work with two EBT-types ("normal" for enterprise taxes, and "WFT" accounting for the investment capex allowance):

Thus for the WFT-basis I deduct OPEX from sales minus DD&A, 95% of investment Capex (900m out of 1,1 bUSD recent guidance), lease + G&A (interest not deductible!)

2023E:
realized sales (after hedging) 4,75 bUSD
- OPEX 1,15 bUSD
= 3,6 bUSD EBITDAX
- DD&A 1,5 bUSD
- Lease + G&A 0,3 bUSD
- Investment allowance (95% of 0,9 bUSD) 0,85 bUSD
= EBT ("WFT") 0,95 bUSD, means 0,33 bUSD WFT-charge "only"

Seems pretty low when compared to 2022 WFT-actuals, but I don´t know where my mistake is. Mabye one of tax specialists can give me a hint.

Currently my figures result in 1,4 bUSD FCF 2023E

PS: what do you guys think of Ithaca? They released a pretty solid trading update confirming their 400 mUSD divident for 2023 payable in three parts. Thus Ithaca currently yields a 18-19% dividend, which seems crazy?! Their production is around 40% of HBRs level. Their 2023-24 hedging looks favorable compared to HBR. Having Cambo and Rosebank ready lined-up the should be shielded quite well against the WFT as well. I am heavilie invested into its mother company Delek Group, because of Newmed Energy but consider shifting some dollars from HBR to ITHACA now...

Here we go: https://www.investegate.co.uk/ithaca-energy-plc--ith-/rns/dividend-declaration-and-trading-update/202302161223101843Q/

Interim Dividend confirmed, offers 17% yield at current valuation.

Ithaca also up like 5,5% this morning.

Do we have any North Sea related news, i.e. commitment to guarantee investment allowence for sanctioned projects irrespective of changes in goverment parties?

Dear Stevo,

Fully agree with your assumptions for 2024 onwards, perfectly fits to the model I´ve created.

Hoever, I can´t follow you when bridging from 1 bUSD/year FCF to £2,5-3,5 B (= 3,0-4,3 bUSD) enterprise value / market cap. (will be the same if we assume debt.-free when discussing the current state of the company before M&A additions).

If we assume debt. is payed of from beginning of 2024 and no M&A additions are made (which are supposed to positively effect the value of the business if we believe management is able to identify those) those 1 bUSD before shareholder distributions flow either into buybacks or dividend. I clearly prefer buybacks at the current valuation, but for the sake of simplicity lets assume a dividens only case.

My model, and I understood from your previous posts that your model too, includes about 1b USD annual capex to nearly maintain the UK production level.

So the 1 bUSD FCF from 2024 onwards (slightly decreasing due to a backdrop in UK production if no expansion investments are made) would basically "become dividends".
I am aware of 6-7 years of reserve life, so North Sea dividends should flow until 2023. Thus, 1b, 0,95b 0,9b 0,85b 0,8b 0,75b, 0,7b even discounted at a proper rate of 15% lead to 3,7 bUSD not including any succesful M&A deal nor the development of current projects in Vietnam/Indonesia.

On top of that at current levels, especially gas slightly below pre-war pricing, I would still imply a decent chance of 20-40% that the WFT is being reviewed and amended with a price-mechanism at any point in time from 2024-2030, which would directly benefit the DCF.

So in my humble opinion its rather a 4,5-5 bUSD company than your rather conservative approach.

Would be highly interested in getting to know if there is any?!
Can´t find information, neither on Harbours website nor anywhere else.

Hi Guys,I am new here, much better quality compared to German forums about HBR.Many thanks @Stevo & @Megla for very useful comments."The project has just started consultation with industry bodies, companies and tax advisors and is considering a number of options such as a variable tax rate depending on oil and gas prices realised."This would be big news and the only "fair" approach., Hope it turns out to be not a smoke screen.Just want to end my post with one general comment. Often reading from several people here, that the buybucks "doens´t work" and as the prove for the missing effect, the poor SP performance is mentioned.In my humble opinion, buybucks are not designed and exucuted to prevent the SP from falling in the first place (of course value appreciation could be a logical direct consequence). Buybacks are exucted when management believes the current SP does underreflect the fair value of the business, so shares a being bought back and cancelled, in order to further increase the "inner-value" for remaining shareholder. Thus, will stable FCF as Stevo calculated and fewer shares (all else equal) the dividend yield increases because same the amount (once decided FCF is used for dividend payments rather than another round of buybacks or M&A) is distributed between fewer shares (people).Maybe the following simple math starting from Stevo´s FCF calc + my conservatice 2024 modification helps:HBR.Market Cap as of today: 3b USD (850m x 3,56 USD SP)Number of shares: 850 mFCF 2023E: 1,3 bUSDFCF 2024E: 1,0 bUSDOption A: buybacks with 50% FCF and start paying dividend from 20240,65 bUSD will cancel approx. 182,5 m shares at todays SP -> number of shares in 2024 down to 667,5m50% FCF 2024 used for dividends then equals 1,50 USD per share (1.000 mUSD / 667,5 m shares)Assuming a required dividend yield by the market of 15% (which is pretty high, Ithaca´s IPO demanded like 12% for instance), the share price might explode to 10 USDOption B: stop buybacks right now and pay out 50% FCF insteadDividend per share 2023: 1,50 USD (1.300 mUSD / 850 m shares)Dividend per share 2024: 1,15 USD (1.000 mUSD / 850 m shares)Share price at 15% req. dividend yield: 7,85 USDSo acc. to B) shareholders receive 2,65 USD dividend (yes, the 2023 amount can be reinvested earlier for some return eslewhere) + hold a share possibly valued at 7,85 USD,but in case A) 1,95 USD have been received (0,70 USD less), but the share price difference should outweight the difference in dividend received, due to the very effective share price cacellation at such a low level as we are currently observing and its prospective effect on the SP when the dividens start at some point in time (but with fewer shares in place then).