Hurricane Energy Share Discussion Threads

[cashandcard] 22/1/2017 14:41

There has been much discussion regarding the commercial merit of FB fields. Although FB has proven prolific production numbers around the globe, it needs to be demonstrated in UK waters. Hurricanes GLA eps is a one-off necessary part of the FB 'proofing' in order to gain full acceptance within the industry.The concerns have always been there, how well connected is the fracture network? How would the field produce over an extended period? What problems might they encounter with producing wells? How high a risk is water-coning? The extensive mapping of the fracture network, smashing well tests and the discovery of 'oil-down-to' at 3C levels helps to alleviate some of those concerns.I certainly feel more comfortable after the last 2 wells.Cash

[ngms27] 22/1/2017 08:53

2P or not 2P that is the question.

HUR would trade like it's peers if the 2P/2C were in a conventional sandstone reservoir. What we have here is an unknown and therefore much riskier investment for a Major.

Over on another board I've suggested $1.2 per 2P/2C barrel would be a decent return for an asset/company sale.

I believe HUR have close to 2 billion barrels now and if Halifax comes in that figure will more than double.

HUR will get taken out post Halifax. The EPS will never happen.








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[leeson31] 22/1/2017 06:16

the EPS is for income and to show the field can produce - nothing to do with proven reserves. the CPR is what will show the the new 2P reserve classification post drilling Lancaster, Lincoln and Halifax, and HUR have said the CPR is being conducted Q1 2017 ie now, well before EPS in H1 2019.

the last CPR conducted in 2013 had 207mmbo 2C for Lancaster. Since then, HUR advise their MINIMUM base case is now ~333mmboe, which imo would easily put the 2P's at ~500mmbo. Lincoln has transpired to be greater than Lancaster so I'd put the 2P's at ~550mmbo. Halifax isnt just a case of how many barrels of oil is there, but more rather, is it part of the overall rona ridge contiguous oil trap:

"The Company believes that if mobile oil can be demonstrated outside of local structural closure at Halifax, then the Lancaster Field could extend further North East along the Rona Ridge."

If halifax comes in, and i believe it will have ~300mmbo 2P's, it shows the whole GLA is absolutely massive, not just 3 assets closely situated to one another each with a certain amount of 2P's....

if so, we're looking at a minimum of ~1.3b+ mmbo 2P for the GLA........

now consider what Crystal Amber have stated:

""Hurricane trades at a material discount to its peer group, on a
valuation of just $0.31/bbl of 2P & 2C resources relative to an
average of $4/bbl of 2P & 2C.""

using ~$4/b per 2P at ~1.3b mmbo, thats ~$5.4b ! (~£4.4b or 365p/sh)

HUR have a multitude of beneficial options to get to EPS stage without affecting dilution, to then have meaningful income from the EPS.... mean while, enroute to EPS, theyre in a strong position to consider all options ranging from actually going to production, to selling the GLA early to a major... id be happy with either in a favourable macro oil rising environment, i think HUR could be a brilliant UK success story, or indeed they may sell to the likes of BP for a handsome sum and the share price wil then reflect the cash/sh nav or indeed be paid out as a special divi, or part mix of both...

so much upside and promise here its astonishing, but the EPS is nothing to do with reserves but purely to show the trice model works.

[flyinghorse1] 21/1/2017 20:34

Be careful with the nomenclature around reserves/ resources.
Rps have no proven reserves for HUR as of 2013 cpr. Thats what the Eps is for to move Lancaster from contingent to proven. I doubt the new cpr will be different without sustained production.

The crystal amber report is also at odds with its self - page 21 says resources are contingent and prospective.

Its proven reserves that are where the value is. Till proven they remain contingent and prospective and carry less value.
Thats why its important that the Eps happens,or a major decides its seen enough and steps in before Hurricane move the resources to proven reserves.

[dcarn] 21/1/2017 20:07

Of course. We all know that.

[zztop] 21/1/2017 18:21

So does that mean 10x sp?

[brahmsnliszt] 21/1/2017 17:58

That stood out to me too BH

[bloodhound] 21/1/2017 16:41

Interesting read laser:

"Hurricane trades at a material discount to its peer group, on a
valuation of just $0.31/bbl of 2P & 2C resources relative to an
average of $4/bbl of 2P & 2C."

Mm....

BH

[laserdisc] 21/1/2017 14:42

boat watchers delete Nao Thunder was just used for the 1 trip

[telbap] 21/1/2017 12:59

All to play for, sounds a stringer and stronger play as the days go by. Might well.move movement my sound money over this way.....

[leeson31] 20/1/2017 19:01

Yes that was me being pessimistic :)

[laserdisc] 20/1/2017 18:32

STRIL POLAR will be back in Aberdeen 8am tomorrow

[laserdisc] 20/1/2017 16:19

VARIOUS PERMUTATIONS bring on Halifax then we will be sure what ever it produces we can get the best shareholder value ,feel it will come and something will be on the table for the AGM

COURTESY of mikemine over on iii thankyou for figures, something to evaluate

I've been thinking about the different ways HUR has to raise the cash for the EPS.

So, going on the Capex, stated as $400mn, and the production target, stated as 17Kbpd, I've come up with some rough figures for revenue/profit. I believe the 17K is an average figure that takes in to account downtime.

At $55pb we get very roughly $20 profit per barrel. I've allowed for POO fluctuations and probable real price as opposed to Brent price. $20 will do for our purposes.

That gives us $340K per day or $124,100,000 per annum. Thats more than enough to service a $400mn loan. This, by the way, is my preferred route as its the least dilutive and the amount is very reasonable for a company with the production and assets that HUR will have.

We could have a farm in but what % would we give away. 25%? That gives the farmee just over $31 PA for his $400mn investment. Not a great return considering the risk although it would give them pole position when it comes to the FDP. 50% would seem nearer the mark and that still gives HUR $62mn PA with no dilution and little risk.

Equity dilution would need to issue 600-700mn shares, at current prices, which represents about a 30-40% dilution. When you consider that is giving away about a third of the rest of HUR's assets as well you can see why this is my least favourite option.

Broadly those are the 3 options IMHO and we can play around with percentages and combinations as much as we like. There may well be other novel ways to raise the cash. HUR has a history of cutting innovative deals so watch this space.

We can see from this crude outline of options that HUR has a tricky decision to make and a lot will depend on the actual terms they can negotiate. I don't envy them as the next funding decision will have long reaching consequences for the shareholder value for years to come.

[pcok] 20/1/2017 16:16

Given our doozer of a rig anyone hazard a guess at how long to TD on Halifax?

[bloodhound] 20/1/2017 16:03

"Hurricane stated clearly in releases they walked away from further negotiation with interested parties so they could gauge the true extent of the GLA resource."

Cashandcard - I suspect that's a part of the story, more like there was 'Big player' interest but the terms on offer weren't acceptable to HUR. Fortunately for us our resource base has and will continue to grow appreciably to the possible extent of one huge contiguous field.

What everybody wants to see is high quality production rates with the FPSO. When this happens HUR will either be taken out or move on with a partner.

Also given that Dr T has said Lancaster should be a 'Fantastic Producer' a partner or takeover could come much sooner.

Let's see what Halifax shows us.

Just my thoughts.

BH

[nicebut] 20/1/2017 15:33

Well lets hope its not just bravado- lets hope there is some proper interest. I suspect it may not be as easy, as you guys suggest, to entice in a partner.

[cashandcard] 20/1/2017 15:11

Ngms27,Regarding your comments on PVR board, that HUR and PVR have had to go it alone re drilling, that's not an accurate reading of what took place. Pvr is a lifestyle outfit that has been trying to farmout it's main project BR since 2013, to no avail. Hurricane stated clearly in releases they walked away from further negotiation with interested parties so they could gage the true extent of the GLA resource. It has proved to be a very important decision for all HUR shareholders and clearly different to PVR which simply could not attract any interest back in $100/bbl days.Cash

[leeson31] 20/1/2017 15:06

i think you're right Gary.... and i think deals already put forward for consideration would be two fold, ie C amount without halifax but X=X amount if halifax comes good.... but i do think the doc will have been considering potential offers subject to agreement... i actually think he wants halifax done then be in a stronger position for the GLA..

[gary38] 20/1/2017 14:57

While on my run earlier l was trying to imagine what route those discussions will take once the data room opened.If it had opened at the end of last year is Doc and team having deals push in front of them without Halifax drill result having to way up making decisions now or waiting till they have the Halifax drill result under their belt and get a possible better deal.

[leeson31] 20/1/2017 14:49

id be happy with either, ngms27. for an asset block sale rather than a takeover, for lancaster/linc/halifax, imo hur would take ~$2.5b(~£1.63b/~136p per sh) if halifax is successful; going on the basis of ~1b barrels 2P for the 3 permits/fields ($2.50/2P)

[ngms27] 20/1/2017 14:39

I'd think takeover more that farm out. I think the liquidity event will be this year.

[buffythebuffoon] 20/1/2017 14:39

Kirtonender,

Tech bubble, leverage...wasn't really needed was it, but it makes me shudder just thinking about it.

Get that right and you could be up there with Buffett and Gates!

Buffy