Unfortunately in the UK Decom expenditure cannot be offset against profits subject to EPL and so UK government only contributes 40% towards future UK ABEX, unlike Norway who effectively fund 78% of ABEX. Also the future Government contribution to ABEX sits as an asset in the balance sheet as a deferred tax asset.
Interesting read thanks - I’ve been picking up HBR for a while now as I like the stock. There is an article on HBR published today in Investors Chronicle that may be of interest too, assuming will be in tomorrows magazine.
OB any thoughts on China developing the biggest Coal to Gas plants in the world. Apparently no other country has done this at scale but China obviously has thought ahead to any LNG block-aids and wanting to get in front of the issue. Will this keep LNG prices capped when US export terminals come online. Believe China also has Coal to Oil too. Wonder if it was in use during Iran conflict.
Makes for some interesting long term demand drivers.
Also just saw this from Norway and their now $2.3 Trillion wealth fund. Jesus is absolutely weeping at the thought the UK could of had one of these if not bigger.
Funnily enough I wrote about this back in July 2025. Not that you’d know from looking at Thungela’s share price right now. It offers a compelling reason for the slight drop in China’s oil imports. (which has been misreported as a “vast drop”)
I think China had been stockpiling coal too even though had their own pits because it was so cheap. Biggest country flex in a while...reducing imports. However i think it does mean that China doesn't want a global recession so you would imagine doesn't want to take Taiwan by force but you never know.
Global macro is a head melt...single stock analysis much easier! haha
This is what happens when politicians get in to power that only have a 5 year (or less) time horizon. Everything short term, nothing is built everything patched up, That is western society explained since WW2 if not before.
Whatever you might say about China...they've had a very long term plan to be the dominant, global power. Control the choke points, infiltrate all levels of Western institutions, levels of governments, copy as much IP as possible.
They are thinking in decades and centuries. Like you I’ve a level of admiration for their success. It is no surprise to see their progression to where they are today.
Regardless of the ideology (and in all honesty the Western governments are as communist) you have to admire the get things done quickly mentality. Like red (the west) and grey (China) squirrels - The West is getting competed away. I'm not sure there's a pinemarten coming to keep things in check.
Some of the undiscounted value seems likely to manifest over the next year; whereas some via election and decommissioning later. I don’t know if you agree ? And perhaps that the HBR shares might follow in stages….what in your view might be a conservative one year view on where they might go?
I’m interested in owning assets that have a lifetime value far in excess of what I buy them for. That’s the logic.
As for at what point will the market recognise that value? That relies upon predicting the mood of a neurotic and sentimental market, who right now has depressed feelings towards Oil and Gas.
Very interesting, OB. Up over 11% in last month so things could be turning around.
Lost opportunity cost though if you bought HBR rather than an O&G major. Shell up 24% plus divis over 1 year.
In doing some research on O&G shares I came across Santos (ASX:STO) which is flat over 1 year. Amazingly bad, given the geopolitical background (worse even than HBR), but could finally be getting its act together.
Yes, I was looking for LNG producers. There is a theory that the forward curve for LNG is wrong and that the US is going to struggle to meet its export contracts.
Santos is an undervalued, high-margin cash generator transitioning from a heavy capex phase to an operational inflection point. With major mega-projects (Barossa LNG and Pikka Alaska) now coming online and ramping to full production, Santos is set to unlock massive free cash flow to fund a 60%+ payout target and lower debt, while providing cheap exposure to global LNG demand growth.
I've been holding Woodside Petroleum since the Ukrainian war began, which is the largest Australian LNG and oil company. It's operating margins are high which was part of the attraction, but the share price has done very little over the last few years so I gave up and sold it on Monday. Brokers have never been bullish on it the stock. Do you think Santos is better value?
I sold Woodside at the start of the year as part of a rationalisation of my portfolio. Should have held on for a 30 odd percent gain!
WDS has done OK in the last year but it has some very ambitious LNG plans so I guess the market worries about execution risks. Until recently at least there were also concerns there would be a worldwide glut of LNG.
I wasn't aware of Santos until the other day. I was just gob smacked that its share price was flat over 1 year; an even worse performance than Harbour Energy. Santos, of course, is over 6x the size of Harbour.
Santos is naturally hated in Australia where there is plenty of anti fossil fuel sentiment. However, its markets are 80% international.
Hi Bill, I’ll answer this as someone who did do that, yes for me it was diversification but it’s also a degree of shuffling based on relative price vs value while keeping a static percentage of exposure to the sector.
Unfortunately in the UK Decom expenditure cannot be offset against profits subject to EPL and so UK government only contributes 40% towards future UK ABEX, unlike Norway who effectively fund 78% of ABEX. Also the future Government contribution to ABEX sits as an asset in the balance sheet as a deferred tax asset.
Interesting read thanks - I’ve been picking up HBR for a while now as I like the stock. There is an article on HBR published today in Investors Chronicle that may be of interest too, assuming will be in tomorrows magazine.
https://www.investorschronicle.co.uk/content/5d26ca2c-5f8d-47b9-bd31-e2317e00d328
That is one of the more interesting analyses, touching on something regular investors would totally miss, thanks.
Isn't that rower facing the wrong way?
OB any thoughts on China developing the biggest Coal to Gas plants in the world. Apparently no other country has done this at scale but China obviously has thought ahead to any LNG block-aids and wanting to get in front of the issue. Will this keep LNG prices capped when US export terminals come online. Believe China also has Coal to Oil too. Wonder if it was in use during Iran conflict.
Makes for some interesting long term demand drivers.
Also just saw this from Norway and their now $2.3 Trillion wealth fund. Jesus is absolutely weeping at the thought the UK could of had one of these if not bigger.
https://oilprice.com/Latest-Energy-News/World-News/Norway-23-Trillion-Wealth-Fund-Posts-Record-High-Profit-in-H1.html
Funnily enough I wrote about this back in July 2025. Not that you’d know from looking at Thungela’s share price right now. It offers a compelling reason for the slight drop in China’s oil imports. (which has been misreported as a “vast drop”)
https://theoakbloke.substack.com/i/162459830/new-demand-for-coal
I think China had been stockpiling coal too even though had their own pits because it was so cheap. Biggest country flex in a while...reducing imports. However i think it does mean that China doesn't want a global recession so you would imagine doesn't want to take Taiwan by force but you never know.
Global macro is a head melt...single stock analysis much easier! haha
If only we would do it in Australia
This is what happens when politicians get in to power that only have a 5 year (or less) time horizon. Everything short term, nothing is built everything patched up, That is western society explained since WW2 if not before.
Whatever you might say about China...they've had a very long term plan to be the dominant, global power. Control the choke points, infiltrate all levels of Western institutions, levels of governments, copy as much IP as possible.
They are thinking in decades and centuries. Like you I’ve a level of admiration for their success. It is no surprise to see their progression to where they are today.
OB
Regardless of the ideology (and in all honesty the Western governments are as communist) you have to admire the get things done quickly mentality. Like red (the west) and grey (China) squirrels - The West is getting competed away. I'm not sure there's a pinemarten coming to keep things in check.
Some of the undiscounted value seems likely to manifest over the next year; whereas some via election and decommissioning later. I don’t know if you agree ? And perhaps that the HBR shares might follow in stages….what in your view might be a conservative one year view on where they might go?
I’m interested in owning assets that have a lifetime value far in excess of what I buy them for. That’s the logic.
As for at what point will the market recognise that value? That relies upon predicting the mood of a neurotic and sentimental market, who right now has depressed feelings towards Oil and Gas.
OB
Very interesting, OB. Up over 11% in last month so things could be turning around.
Lost opportunity cost though if you bought HBR rather than an O&G major. Shell up 24% plus divis over 1 year.
In doing some research on O&G shares I came across Santos (ASX:STO) which is flat over 1 year. Amazingly bad, given the geopolitical background (worse even than HBR), but could finally be getting its act together.
Isn't Santos mainly natural gas?
Yes, I was looking for LNG producers. There is a theory that the forward curve for LNG is wrong and that the US is going to struggle to meet its export contracts.
Matthew Smith — Natural Gas: The Next Bottleneck
https://traffic.megaphone.fm/CLS1352215254.mp3
Santos is an undervalued, high-margin cash generator transitioning from a heavy capex phase to an operational inflection point. With major mega-projects (Barossa LNG and Pikka Alaska) now coming online and ramping to full production, Santos is set to unlock massive free cash flow to fund a 60%+ payout target and lower debt, while providing cheap exposure to global LNG demand growth.
I've been holding Woodside Petroleum since the Ukrainian war began, which is the largest Australian LNG and oil company. It's operating margins are high which was part of the attraction, but the share price has done very little over the last few years so I gave up and sold it on Monday. Brokers have never been bullish on it the stock. Do you think Santos is better value?
I sold Woodside at the start of the year as part of a rationalisation of my portfolio. Should have held on for a 30 odd percent gain!
WDS has done OK in the last year but it has some very ambitious LNG plans so I guess the market worries about execution risks. Until recently at least there were also concerns there would be a worldwide glut of LNG.
I wasn't aware of Santos until the other day. I was just gob smacked that its share price was flat over 1 year; an even worse performance than Harbour Energy. Santos, of course, is over 6x the size of Harbour.
Santos is naturally hated in Australia where there is plenty of anti fossil fuel sentiment. However, its markets are 80% international.
Thanks OB. I already hold both DEC and ITH and I'm still not convinced I'd sell any or much of either to buy HBR. Based on prospects, yield, risk et.
EXCEPT maybe to diversify perhaps. Anyone dis/agree?
Hi Bill, I’ll answer this as someone who did do that, yes for me it was diversification but it’s also a degree of shuffling based on relative price vs value while keeping a static percentage of exposure to the sector.
OB