Harbour Energy Share Discussion Threads

[steve73] 06/3/2019 04:32

Ref. the S-o-L figures.

Back in late 2015 through 2016 as we recovered from the very low oil price (and the suspended trading during the EON deal) there were around 6% stock on loan as a minimum.

As it became apparent that we would fail the covenant tests and the refinancing discussions & proposals got underway this figure steadily increased to 15-16% by early '17 when the CB re-pricing proposal was announced. During this period the details of the warrants were announced, and the increase in loan stock was approximately equivalent to the number new warrants that would be issued.

During the "VWAP period" the stock-on-loan had increased to around 28-29% - the share price during this period had been driven down from 70-80p (with an earlier increase to 95) to below 60p resulting in a VWAP average of 62p which was the minimum price to be used as the basis for the revised conversion price for the convertible bonds. The revised CP was set at 74.7p, although and due to a very low $/GBP at that time, to just $0.9144. The previous CP was $7.00, over 400p, so the revised CP would result in almost 8x as many new shares being issued as originally implied.

On completion of the refinancing in July '17, there were still around 29% SoL (which was around 40-45% of the total new shares that would result from the CBs & warrants), until the CB's were "requested" to convert in Jan'18. As a result of the majority of the CB's taking the enhanced offer, the shareholding increased by c. 30%, and the SoL dropped by an equivalent amount to 19%, and then further to less than 9% in Feb (or 70% of the remaining CBs+Warrants).

The SoL remained around 8-10% until the remainder of the CB's were forced to convert in Aug, at which point it dropped to less than 6%, which is approximately the same number as there are warrants remaining.

The past few months have seen the SoL increase to almost 20%, which represents around 3x the number of warrants remaining.

So, the question is, why? Unlike previous high numbers of Stock-on-Loan which were more than offset by "newly becoming available shares" from CB's or Warrants, there are now insufficient "still to be created" shares to replace this loan stock.

I estimate that there is over 100MM of loan stock that needs to be returned. This is over 10% of the total stockholding, which is a huge number of shares that need to be bought in the market.

Unless, there is to be an equity fund raising of some kind that the market has not been publically made aware of.... which then begs the question; have some "potential" lenders have been approached and they have used this "inside information" to increase their shorts to manipulate the price.? Of course this would be totally illegal - at least in my understanding.

So IF there is to be some equity raised (perhaps for Chevron assets, or for SeaLion, of for some other deal), then one would hope that it would make "good business sense", and the result would be a longer term strengthening of the share price, as this "new business" materializes.

But if there is NOT any requirement for additional equity funding, then I would expect the share price to rise aggressively in a much shorter time frame, as this loan stock is bought and returned.

Happy to hear other's thoughts.. both supporting and critising this conclusion.

Or perhaps just wait until tomorrow and find out in the Ops Update.

[andypop1] 05/3/2019 22:23

OnedB,
Interesting, so in November when the stock on loan was just 5.81% would the same theory apply seen as the company was still listed on the FTSE 250?
Nothing to worry about then?

[lbrokes] 05/3/2019 19:58

Make sure to pay attention to his shaft

[asa8] 05/3/2019 19:34

Life blood sucked out of this wink wink brown envelope anyone

[adg] 05/3/2019 18:33

Back in Aberdeen tonight for a few days
Meeting (socially) the top honcho of a medium cap oil company tonight, used to work with him 20+ yrs ago when he was a DCS application engineer overseas.

[onedb1] 05/3/2019 18:26

I read the on loan discussions and wanted to highlight the fact that as PmO is a Ftse250 stock (and hence will be included in a few ETFs )it is not uncommon for these stocks to sit in a sec lending desk / Prime broker book . The ETF gains a little fee for lending and is part of the performance of the ETF in addition to the regular ETF market performance. More on this if interested Https://www.etf.com/sections/features-and-news/securities-lending-good-etf-investors?nopaging=1

[johnwise] 05/3/2019 16:53

TSX Set for Strong Start on Oil Price Hike

Canada's benchmark index looked set to start the Tuesday session in the positive territory, boosted by rising oil prices .

Oil edged up early on Tuesday as China moved to cut taxes to stimulate its economy, auguring demand growth as Saudi Arabia's production cuts cut into supply and Russia announced producers there are complying with 228,000 barrels per day of cuts.

[dhanna1] 05/3/2019 15:56

Useful post Steve. Will try follow links.
Many thanks. D

[fireplace22] 05/3/2019 15:26

Whiskey, any views on the Apollo involvement with PMO in respect of the Chevron assets.

[whiskeyinthejar] 05/3/2019 14:41

So lots of shorting going on, but mostly holdings of less than 0.5%. Doesn't this suggest pi speculators? Certainly data does say there's isn't one single big bad green-skinned manipulator controlling everything before him.

I guess PIs are speculating PMO will make a bad deal with Chevron or that Saudi Arabia will put Trump's wishes ahead of their own economy and long term health of oil production (and therefore global economy).

Anyway, shorts almost doubled in February and yet the share price held firm. That's pretty bullish IMO. As Steve says, shorts have to buy eventually and if they are retail punters they don't tend to think long term imo.

I think deadline for bids for Chevron assets was end of January so we should hear something this week.

[johnwise] 05/3/2019 12:14

OPEC will Retain Production Cuts To Keep Oil Prices High

OPEC will probably achieve its goal of eliminating oversupply from the oil market by April, said Jeff Currie, global head of commodities research at Goldman Sachs.

[steve73] 05/3/2019 11:48

It means that this number of shares have been loaned out.
Not all of them will necessarily have been used to provide shorts (but the general assumption is that probably most of them are).
Check the euroclear data.. (if I can't post the link - do a search)



(you need to register as a guest, and then click the above link again - this should work...)

Shorttracker link in the header only shows shorts of more than 0.5% (as you say, just 3.41%), so there's probably lots of short holding of just under the 0.5% disclosable limit.

[fuji99] 05/3/2019 10:45

Steve - What means "150 million shares on loan" ?

[steve73] 05/3/2019 10:41

Fuji - where did I mention shorts?

[fuji99] 05/3/2019 10:39

Passing a message regarding shorting:
A poster on the Optibiotix board sent through this petition. I think that it's worthwhile for a many folks to sign it as possible,as it relates to all AIM stocks. Here is a fresh petition to ban shorting of London AIM stocks. It only takes a few seconds to sign and needs a minimum of 10,000 signatures to get noticed, so please pass it on to any other interested parties. John

[fuji99] 05/3/2019 10:18

Steve73 - You are wrong ! How did you get that number ?
There are 3.41% shorts in 817 million issued shares.
That makes it 27.8 millions - not 154 million !

[fireplace22] 05/3/2019 09:52

Lot of talk elsewhere about some sort of deal with Apollo in the offing regarding gradual exchange of our Mexican assets for Chevrons NS?

[wskill] 05/3/2019 09:51

It must be obvious even to the FCA that the shorts have had previous knowledge of PMO actions this huge short must be in their knowledge of what the company is doing with the Chevron North Sea assets.

We will find out in the fullness of time what PMO are up to.

[steve73] 05/3/2019 09:32

That's 154 MM shares on loan.

3x the number that could be covered with the warrants..

[steve73] 05/3/2019 09:31

Euroclear data for Feb just released.

19.65% average stock-on-loan during Feb. Up from 11.23% in Jan, 13.32% in Dec, 8.21% Nov, & just 5.81% Oct.

This will fly when these boys throw the towel in... perhaps on Zama news, or this weeks Op Update...

Unless they know something the rest of us don't..!

[the guardian] 05/3/2019 08:20

In other words, it lends out shares for shorting.