Harbour Energy Share Discussion Threads

[bakedbean57] 17/1/2018 11:42

Looks like a trades report from a couple of months ago....

[begorrah88] 17/1/2018 11:18

The advfn trade monitor is all over the shop today

More so than normal

Reporting many AT trades as buys when they are sells

[gregpeck7] 17/1/2018 11:08

Moved some more over to uen... 2000 bopd 9 mil mkt cap. Money seems to be rolling into the smaller oilers now. Will come back for pmo when it's cooled off a bit.

[begorrah88] 17/1/2018 10:38

I'm not too troubled about POO as we've had a great run so are overdue a pullback on Brent.

Been a couple of weeks since we've had a proper slap down around the EIA/API figures so won't be surprised if we take a hit over the next couple of days, that will impact on PMO but things looking good from here.

[steve73] 17/1/2018 10:33

adg, $180MM would be approx. 73% of the CB's that were refinanced. Some of those had already been converted (approx. 4%)

[cumnor] 17/1/2018 09:48

Much higher than I anticipated-and share price performing fine given this is 'old' news.

[adg] 17/1/2018 09:42

what was the % approx. take up?

[prewar] 17/1/2018 09:30

Thanks for posting that rationaleee, very technical but really interesting. I think the quick interlude is the most relevant bit here, copied below. The key points I took from this:

1. They like volatility they don't care particularly about the price of the share price
2. They would increase short position as share price goes up, reduce as share price goes down.


Point 1 PMO highly leveraged to a highly volatile commodity, suits them
Point 2 This stacks up with short tracker data

My own numerical example posted was very simplistic but I think reached the same conclusion, increase short as share price goes up and vice versa.

Value others thoughts, Begorrah seems to have done a lot of thinking on this, maybe he can help?


"Quick Interlude on Convertible Arbitrage: Convertible hedge funds buy convertible bonds and sell short the underlying stock. The aim is to hedge out stock-price risk and make money on credit and volatility. A convertible is sort of like a bond, in that Herbalife has to pay you back in 5 years and pays you interest until then, but also sort of like stock, in that if Herbalife's stock price goes up you will convert the bond and own Herbalife stock. People use the term "delta" to measure how stock-like a convertible is. A convertible with a 100 percent delta is just like stock; a convertible with zero percent delta is just a straight bond that will never convert into shares. Most newly issued convertibles have a delta between, I don't know, 50 and 90 percent.

If you're looking to hedge out stock price risk, you should sell short an amount of stock equal to the delta: Roughly speaking, if a convertible is 70 percent stock-like, and you sell 70 percent of the underlying stock, you're left with zero stock price risk. Why do you do this? Because it turns out that the math requires you to adjust your hedge over time. If the stock price goes up, the convertible becomes more stock-like -- it gets more likely to convert -- so the delta goes up. If your delta was 70 and now it's 75, you need to sell 5 percent more stock. As the stock goes down, your delta goes down, and you buy back some of the stock you shorted.

Notice that you're buying when the stock goes down and selling when it goes up. Buy low, sell high is a good strategy; I recommend it. The more the stock bounces around, the more you get to buy low and sell high, while always keeping your price risk hedged. What this means is that the convertible is just a bet on volatility: The more often the stock goes up and down, the more money a convertible arbitrage investor makes. If the stock stays flat, it's a bad deal. If it goes up and down and up and down, you make money. You don't care whether it ends up or down at the end of the day, just if it bounces around a lot on the way there.

To do this strategy, you need to sell the stock short. To do that, you need to borrow the stock; short selling without borrowing is illegal. Some stocks are hard to borrow. Herbalife is not, especially, 1 but it is risky to borrow, because some people are very noisily shorting Herbalife, and some other people are very noisily talking about engineering a short squeeze. If Carl Icahn were to launch a tender offer, say, it might get a lot more expensive to short Herbalife, and the convertible trade would become considerably less fun. Selling stock to Herbalife -- through its banks -- and not having to deliver the stock for five years -- because you're selling via swaps and forwards -- is a way around that problem. You have, in effect, five years of guaranteed stock borrow."

[steve73] 17/1/2018 09:28

jelenko, they'll just be forced later this year, (if PMO decide they need to be....0 They'll have got 9 months of interest as more shares (so they could well come off better) or they'll have to wait until maturity.
I'm actually surprised the uptake was so high.

[begorrah88] 17/1/2018 09:27

I'd imagine there might be a few small time shorters that will be trying to effect some impact on the share price to cover their own backs but I think they'll be swimming against the tide now.

[bakedbean57] 17/1/2018 09:21

With those sells just gone through on SETs someone's trying for the push back down

[cumnor] 17/1/2018 09:13

A huge whack of the debt converted to equity-and early-really good news.

[rationaleee] 17/1/2018 08:19

Interesting convertible arb story:

[carla1] 17/1/2018 08:06

Oh well converting at 68p...Effectively a placement..75p buy order set

[jelenko] 17/1/2018 08:03

I'm pretty sure the company has a plan to deal with those that have not converted.They had the chance to do it on favourable terms,now I suspect they will be shafted.

[bakedbean57] 17/1/2018 08:01

Going to be a day for shenanigans

[prewar] 17/1/2018 07:56

Are whitebox an arber do we know? They seem to have adopted a similar strategy to the other two, increasing short position over time as share price gone up. Should also remember that issued share capital been increasing as conversion takes place.

[begorrah88] 17/1/2018 07:55

One of those days when anything could happen with the sp

On the one hand $180 is a great result for clearing the debt but it will be 200 million shares diluting the mcap, but as we've seen recently, the share price is governed by some much bigger factors than standard supply and demand.

I'm glad to see a lot of the CB's being cleared out but probably some pain first for the share price

[With my usual caveat of being a shocking judge of how the share price reacts to news]

[steve73] 17/1/2018 07:23

So they've effectively offered 2years interest upfront... (well, 1.75 as this closing qtr is included).

Might see some shorts closing today.. and some shares being sold.

[s34icknote] 17/1/2018 07:18

180 million dollar conversion Rns out .Sicknote

[adg] 16/1/2018 20:45

Assume we will get RNS in the morning re CBH take up?

[jelenko] 16/1/2018 20:15

I think FCF will be more than 380m

[rationaleee] 16/1/2018 18:31

PMO Broker rec RBC

Analysts at RBC downgraded their recommendation on shares of Premier Oil from 'outperform' to 'sector perform' after the shares had reached their 100p target price, which was unchanged.



That target, they explained, was premised on a 2018 price for Brent oil of $59 a barrel, rising to $60 in 2019, which was $10 a barrel below then current prices.

Hence, should oil prices remain at $70 out to 2019, their decision to downgrade might turn out to be mistake.

Under such a scenario, their estimate of the company's fully diluted tangible net asset value, excluding Sea Lion, would rise from 106p a share to 138p.

Indeed, Premier's free cash flow would almost double to roughly $380m, allowing it to again meet its temporarily loosened debt covenants by a comfortable margin.

Nonetheless, should the shares slip - likely on the back of weakness in the oil price - into ramp-up at the Catcher oil field and as the deleveraging process gathers momentum through mid-2018, they said they would recommend "accumulating" its shares.

To take note of, RBC's forecast was that the company would be able to return to an 'investment grade' net debt/EBITDA multiple of 3.0 by the first quarter of 2019, when that relaxtion in its covenants was due to end.