Directors’ Deals: Harbour Energy key shareholder cuts stake

Oil and gas producer Harbour Energy is in a seller’s market as an oil and gas producer, especially given its European base of operations. Its key shareholder, EIG Asset Management, of which Harbour chair Blair Thomas is the chief executive, is selling as well, offloading £5.6mn in shares in the last week of July.

The timing was not perfect — its share price has fallen 29 per cent since May — but this is small beer for the North Sea company’s main shareholder, which had already cut its holding in Harbour from 37 to 15 per cent last month.

That was because EIG handed its fund investors direct stakes in Harbour. “As EIG is still the largest shareholder following the distribution, we remain committed to the sector, confident in the company’s current strategy and supportive of its management team,” said Thomas. The holding is now worth just under £500mn. 

The share price drop follows a wider industry sell-off in recent weeks, driven by recession concerns and a slightly weaker oil price. Of course, gas prices remain astronomical and even in the US, where petrol and diesel prices have come up from comparatively low levels, demand destruction has been limited.

Harbour itself has had a dramatic few months at a corporate level, too, landing in the FTSE 100 in May on Ferguson’s demotion and then dropping back out last month because of GSK’s (GSK) spin-off of Haleon.

Chief executive Linda Cook also appeared before Parliament’s environmental audit committee alongside local bosses for Shell and BP. In that company, Harbour is an outlier in that it is not also investing in renewables and other green technology. Cook told MPs that was not the point of the company: “We are acquiring relatively mature assets from larger, typically major, oil and gas companies that they are no longer investing in and which are no longer strategic for them,” she said.

Wizz chair goes bargain hunting

This summer was meant to be the time when the low-cost airlines put the problems of the pandemic behind them — when both they and their customers enjoyed a return to sunnier climes.

Instead, it’s been a period of chaos, with under-resourced airports unable to handle more passengers, leading to caps on capacity and hundreds of flight cancellations.

Airline owners are understandably frustrated. easyJet said disruption had cost it £133mn in the three months to June and Wizz Air booked a quarterly loss of €453mn (£379mn), despite quadrupling revenue to €809mn. It booked €65.5mn of “other costs” in the period, mainly relating to flight disruption and customer compensation payments.

Wizz also found itself in a more difficult position than peers after deciding to unwind fuel hedges in 2020, only to then be caught out by a subsequent surge in pricing — jet fuel costs rose by 61 per cent last year and are up 55 per cent so far this year.

The airline announced a return to hedging in June and said last week that it had already hedged 46 per cent of its requirements for the nine months to March 31.

Its share price has already taken a hit, though — down 45 per cent this year, compared with declines of 28 per cent at easyJet, 18 per cent at Ryanair and 14 per cent at Jet2.

Indeed, Wizz’s current market cap of £2.36bn, is only around £300mn more than Jet2’s, despite having a fleet that is 50 per cent larger.

Wizz chair William Franke, whose private equity fund Indigo Partners owns stakes in several low-cost airlines, seems to think the sell-off has been overdone, buying £1.9mn worth of shares on July 22.

Not everyone agrees. HSBC analysts think the airline might face a liquidity squeeze this winter if it goes ahead with a ramp-up plan to grow capacity to 140 per cent of pre-pandemic levels, meaning it would need either to tap shareholders for more cash or risk its investment grade status by borrowing more.