you make some excellent points in your post which I will have a crack at answering.
Why has HHR been held in limbo by Viaro since Jan 2024?- Labour announced their proposed changes to the Energy Profits Levy. Until there is certainty around tax which will be announced in the October budget many projects have been deferred.
Why Viaro spend 500m to purchase the Shell assets to become 7th largest UK oil & Gas company if there is Uncertainty in Uk north sea windfall tax Labour policy?- IMO they wouldn't. Viaro is already a significant player/producer and would have direct access to Labour. IMO they have a better understanding of what the budget will announce. Like you said Viaro isn't going to spend 1/2 billion dollars on a guess.
Now that Viaro own the Shell assets they need to increase the throughput in order to generate a return. Existing production through Shell/Bacton is well under capacity. The JV assets are in close proximity to the Shell infrastructure. HHR have also secured an additional license adjacent to the JV license that Viaro may be interested in.
The Labour budget at the end of October will finalise the Total Relief on Investment expenditure (on Oil and Gas assets). It will move from 91% to either 81-83% or 46%. The likelyhood of the project progressing depends on the final announcement.
If the total relief stays at 81-83% IMO Rockrose will want to progress the project but I am not so confident that HHR will stay a JV partner. I think they will either have to take the 20% option, convert the 20% to a royalty stream or even take a payout from RockRose. HHR do have an ability to negotiate with Rockrose as the 20% option is a free carry and has no conditions on HHR's side. It would be more a case of RR wanted HHR out of the JV and paying a reasonable number to do so.
The reason that HHR aren't buying their own shares is that they know they are not in control of project timing. HHR really need to conserve cash and look to invest outside of the UK North Sea while they wait for Labour and Rockrose to sort out tax. This why they HHR have taken a position in PRM which gives us exposure to the Big Apple prospect in the Gulf of Maxico.
The day that HHR farmed out 60% to RockRose they lost control of the JV. Any bet on HHR is a bet that RockRose want to progress the project.
In December last year, after HHR had announced the 20% fully funded option, the SP was at 2c. It collapsed after Labour announced their proposed O&G Taxation. If Labour now announces a tax position that is more workable than the worst case in could be good for the SP.
HHR Price at posting:
0.6¢ Sentiment: Buy Disclosure: Held
(20min delay)