Harbour Energy Share Discussion Threads

[fitton] 12/1/2018 13:44

Wycth Farm 5-6k.Catcher second half 30k

[fitton] 12/1/2018 13:16

Jefferies latest broker note buy £1.20 target, up from £1.10

[fitton] 12/1/2018 13:13

Many more options open to them now.An extra 25k bopd and oil over $60 makes a big difference.

[gregpeck7] 12/1/2018 12:23

Reduced slightly here today after the run... Genl looks like it's about to do similar so possibly time to shift some funds over.

[bakedbean57] 12/1/2018 11:21

Preset trading band today then...

[begorrah88] 12/1/2018 11:11

So ideally you want a bulletin board with no posts on itPretty sure you can find one if you look hard enough

[johnrxx99] 12/1/2018 10:57

While I invested in this and have done well from 60písh, I dislike holdings with so many posts per day. Signs of no confidence from the posters imo.

[bakedbean57] 12/1/2018 10:20

Prewar about right but they can also just swap out stock on loan against warrants etc.

[begorrah88] 12/1/2018 09:23

The MM's will be hunting stop losses btw

[begorrah88] 12/1/2018 09:21

Very helpful summary Steve

I think we are seeing some profit taking today, and fair enough too.

The chart needs a bit of a pullback as it didn't happen yesterday when it looked like it would.

Don't know how low it might dribble today and POO could play a big part today but I'm happy that the future is looking brighter and we've had a cracking run of late.

Sitting tight

[prewar] 12/1/2018 09:21

Thanks BB for your response, so if I understand it correctly you'd say they were depressing the share price pre re-fi to get lower CP and then letting the coiled spring uncoil post re-fi? How would they do this? By increasing their short position over the depress stage and then reducing short during the uncoil phase?

Begorrah, value your thougths here obviously.

[prewar] 12/1/2018 09:17

Steve, thanks for response, think we're not too far different in views.

In my numerical example I thought that the CBH would try and protect some of their downside risk from PMO going bust from say low POO, shorting sufficient shares to cover some or all of their capital and expected value from future accruing interest. Depending on their risk appetite they may choose to cover none, all or some of this, does that make sense?

They obviously needed some sort of carrot to agree to the July 17 re-fi hence the 7x drop in CP as you state. Cost of doing the re-fi which the equity holders will bear but seemed to make sense.

[paulbiya] 12/1/2018 09:08

Much lower volume on all oilers today.

[steve73] 12/1/2018 08:55

prewar,
The way I understand the CBH shorting is as follows:

The CBH takes a short for every potential share he can convert to.
If the share price rises the short looses value, but the bond (once converted to a share) gains by the same amount... So he's NET even. He must pay to borrow the stock, but this is probably offset by the interest he gets (enhanced if he's getting cheap stock rather than cash).
If the share price drops below CP, the short gains value whilst the bond value is retained at it's maturity value. So potentially he makes a profit.
Clearly with the share price rising there is now little benefit in holding a balancing short, but if it's not actually costing him anything then why not keep holding?

If the CBH is NOT shorting, then as the share price rises, the CB's potential value when converted is rising. But in the meantime it's earning a little interest, so there's little incentive to convert early UNLESS the cash is required elsewhere.
So with a rising share price there is still little benefit in converting and selling unless the holders have other (better) investment opportunities.

In both cases there's an incentive to keep holding on the off-chance that the oil price crashes (or some other negative event occurs), another refinancing becomes necessary, and perhaps the CBHs can renegotiate an even lower conversion price. It certainly worked well for them last time in renegotiating from $7 to $0.9174 so allowing them to accumulate more than 7x as much equity. IMO, the possibility that we'll fail our covenant tests and need yet another refinancing are rapidly diminishing, but of course there's always the chance of a black swan..

On balance, it's probably better to remain unconverted, so Tony has dangled a carrot to try to persuade them to convert early.

FWIW, similar logic applies for the warrants. Better to leave them unexercised until the latest possible date. Each one is effectively valued at one share but available at a discount.. Why spend the cash to convert now when you can get the same benefit at the same cost by converting later. Of course, if the share price looks like it'll drop for a sustained period then we may see a lot more conversions according.

At least this is how I see the situation... NAI, DYOR etc.

[bakedbean57] 12/1/2018 08:28

Quite simply both

[prewar] 12/1/2018 08:18

Begorrah/bb

You guys have obviously got a better handle on this than me. Has the share price mgmt in your opinion been pretty refi, post refi or both. Refi completed end of July 17 iirc.

[bakedbean57] 12/1/2018 08:07

Cheers Beg I appreciate that and acknowledge at Times my frustrations did get the better of posts! Conspiracy it was indeed not!! I think this allows benefit to both equity and senior debt holders, ones with shorts for arbitrage get a more reserved way of exiting at a controlled price point and we get the 'chance' to see some of that 'technical structure' removed....

[prewar] 12/1/2018 08:01

Steve

It's definitely complex I thought the holding pattern getting linked to the rns would be only if it was conditional on some sort of share price metric. I only skimmed through the rns but seemed to be cbh's make an offer for sweetener but pmo can decide how much if any to take up if any.

Yesterdays chart looked odd indeed, the highly volatile opening few hours made the scale wide so that didn't help. Could have been leaked early that something was coming but that might have just led to pause for breath to see the finer details.

I value your thoughts here, if you get chance could you see if the principle of increasing shorts as share price rises holds water for unconverted bonds. Clearly a million variants here but principle could be hopefully applied across the piece.

[begorrah88] 12/1/2018 07:30

BTW

Well done bakedbean57

You have got a good handle on this and been one of the few to call out the continual management of the share price in the face of many posters refusing to accept it was happening.

It has overspilled into posting frustrations at witnessing it, but not being able to do anything about it, for me more than most but I like to think we are moving into the upside of that management now.

The RNS from TD signals intent to me more than any short term impact on the share price [I'm a poor judge at calling market reactions] so very pleased to see it.

[begorrah88] 12/1/2018 05:38

It might explain why the share price went into the £1 'holding pattern' yesterday as you highlighted Steve.

[steve73] 12/1/2018 04:11

The way I see this is that CBHs are being offered 3-6% cash upfront to convert early, rather than holding to maturity (May-21) and receiving (approximately) 3.5(yrs) x 2.5%, or 8.75% in regular interest.

But since the interest is currently paid in shares at the prevailing price, IF the interest shares were retained and IF the share price were to double by maturity they could effectively get double that.

Is a bird in the hand worth 2 (or more) in the bush to them...?

Certainly by the price action yesterday afternoon (or even the volume over the past few days), it does appear that news of this offer had leaked out and various parties were positioning themselves to take advantage.

December average for stock-on-loan shows just over 119MM shares, down from 131MM average for Nov, so it appears that less than about half of the remaining 235MM Convertibles are being shorted at most.

I'm still trying to figure out whether this offer better suits those CBHs who have short positions, or those who do not. I think it make little difference really.