Hurricane Energy Share Discussion Threads

[hyper al] 18/12/2020 10:14

blimey, sweeping the sandstone now, sounds like they are collecting the dregs!

[tcarter66208] 18/12/2020 10:06

You need to stop with your false ramping bs. Youre a danger.

[kaos3] 18/12/2020 10:04

bought back those sold at 5p - same number

[ngms27] 18/12/2020 10:01

Here's what I said:My model suggested production would now be around 12k - TickA water injector alone wouldn't fix the issue, they needed a producer higher up - TickEquity is likely worthless - Tick Bondholders interests don't align with shareholders - Tick

[deltalo] 18/12/2020 09:54

Well oversold, mostly positive news for a change

[sbb1x] 18/12/2020 09:51

Added a few more

[jungmana] 18/12/2020 09:37

Once the news is properly assessed and many realise that is priced in already, imo could see 4p+ again early next week.As I said in with a 3k punt at 2.90p about

[fat frank] 18/12/2020 09:37

TGG - Agreed, but rig rate is definitely in their favour. I firmly believe they will get a capable unit at sub $150K dayrate.

I just hope they can do any workscope before winter as WOW could put costs through the roof.

Not sure if sourcing plumbing kit will be a problem during this time of complete inactivity in N Sea???

[thegreatgeraldo] 18/12/2020 09:31

Frank - Company statement doesn't make any sense to me...taken as read that 7z can't be produced in its current configuration.

,,,btw, in an ideal world, it would presumably be a fair bit cheaper if they could drill the 7z ST & WI back to back? Thay'd need to rush thru their studies & plumbing kit may be an issue, so maybe not an option even if fundng weere there

[hiddendepths] 18/12/2020 09:29

tgg - I had to read that twice! They mean add to the overall production capacity.... ie incremental to well 6. Very badly worded!

[fat frank] 18/12/2020 09:26

TGG; 'How is the sidetrack going to help production at well 6?'

Only thing I can think of is possibly case off the current areas of communication????

[jungmana] 18/12/2020 09:25

Sold my small punt on Wednesday at about 4p when my stop got triggered. Just back in with another punt about 2.90p

[jibba jabber] 18/12/2020 09:22

That's it then, game over, what a disastrous end to such a promising story.

[thegreatgeraldo] 18/12/2020 09:20

" the Company has focussed on the location, operations planning and execution in 2021 of a new production well in the central "attic" high of the Lancaster field, by re-entering and side-tracking the existing 205/21a-7z well. This could add meaningfully to the production capacity from the existing 205/21a-6 well, "


How is the sidetrack going to help production at well 6? Obviously, a sidetrack of 7z was a popular suggestion here 3 months ago.

[fat frank] 18/12/2020 09:20

From Update:

'Hurricane recently appointed ERC Equipoise Limited as its Independent Competent Person and reserves auditor. A Competent Person's Report covering the Company's West of Shetland assets is still on track for completion by the end of the first quarter in 2021, at which time updated estimates of Lancaster reserves and resources will be available, together with updated resources estimates for the Company's other assets'


Surely it all depends on this...........

[yasx] 18/12/2020 09:16

ghh,

Spot on summary.

[heialex1] 18/12/2020 09:15

Let's see if Crystal Amber step in again or if they partly find some of the upcoming work. It's an option at this stage...

[ghhghh] 18/12/2020 09:06

LB

All I know is that 90% of the CB's held by less than 10 holders. I'm not aware of any duel holdings.

Re valuation, the bottom line is that no one here has a clue. We need to know latest modelling setting out potential upside from both options and we need to know level of dilution.

I posted last month that oil rising is a two edged sword for equity since it increases the potential CB return from running the Company into liquidation in 2022 when FPSO can be terminated. This is clearly a risky strategy for CB's and unlikely to offer full recovery.

Hence there is a deal to be done if equity can cough up say $50m, CB's take a significant haircut in exchange for equity upside and extend redemption date.

But again, everything hinges on the potential upside. If very significant it will be easily doable.

If borderline risk:reward the fat lady may be singing....

We need to wait for this info.

[fat frank] 18/12/2020 09:04

From Hannam:

"Lancaster development proposed and funding options being considered
Hurricane released an operational and corporate update today. As expected given the major reserves downgrade earlier this year, Hurricane has flagged the possibility of equity dilution or even the wipe out of equity value if no agreement on the funding of its development plans can be agreed with stakeholders. However, we continue to see considerable value remaining in the Lancaster asset if funding for further development of the field is forthcoming. Hurricane currently has US$87m in available cash (versus a market capitalisation of US$114mm and outstanding convertible bonds of US$230mm) plus we estimate ~US$50mm in restricted cash. The company is also free cash flow positive at current oil prices and production levels. HUR remains very geared into oil prices: at current production rates of 12kbbl/d, we estimate US$40mm of incremental cash flow if oil prices move up $10/bbl (35% of the current market cap for just one year’s production). Also, if it can boost production by 5kbbl/d, over the course of a year based on a US$50/bbl realisation, this would add ~US$90mm of revenue with little incremental opex.

Further development plans for Lancaster have been refined
Over the past few months, since the release of the technical review, Hurricane has carried out a significant amount of work to revise the technical interpretation of the Lancaster reservoir. The objective is to deliver production levels which ensure resilience in a volatile oil price environment, as well as to achieve optimal further development of the Lancaster field to maximise stakeholder value. The first development solution is to bring on a new production well through the re-entering and side-tracking of the 205/21a-7z well, to add a significant amount of incremental production starting in Q4’21 and at an estimated cost of US$60mm. This could potentially allow production to get back up to 20kbbl/d in 2022. The other project mooted is the implementation of a US$75mm water injection scheme in the NW of the field in 2022, which on our estimates could add 10mmbbl of 2P reserves (from 2C resource) and at US$60/bbl Brent would be worth US$231mm or 9p/sh unrisked (we carry 5p/sh risked in our NAV). A pilot well to derisk the feasibility of this could be drilled relatively cheaply (~US$10mm in 2021) if the side-track takes place.

Current production of 12kbbl/d with a 23% water cut
Hurricane remains on track to meet its production guidance for the final four months of 2020 of 12-14kbbl/d, albeit at the low end of the range. Relative to October when the 205/21a-6 well was producing at 14.5kbbl/d with a 19% water cut, the production has been choked back to 12.3kbbl/d with a slight increase in the water cut to 23% (similar on an absolute basis). The water production level is well within the handling capacity of the FPSO but the well production rate has been choked back to manage the reservoir and avoid water coning issues. In 2021, we expect production of 11kbbl/d, a moderate decline, which may be partially offset by a Q4 bump from the 205/21a-7z well re-entry.

Valuation: no change to our risked NAV of 10p/sh
Our risked NAV is 10p/sh (US$43/bbl Brent in 2020 and US$60/bbl flat long term; 10% discount rate). Our core NAV only includes the value for the 2P reserves (worth 10p/sh risked) and including the liabilities gives a core NAV of 2p/sh. Even with the heavily downgraded contingent resources, we have a value of >40p/sh unrisked for the 2C resource, which on a risked basis is worth 8p/sh. The US$459mm net asset value held on the balance sheet for Lancaster implies a value of US$8/bbl for the remaining 2P reserves and 2C resources, totalling 57mmbbl. Assuming 11kbbl/d of production in 2021, we expect Hurricane to generate between $45-125mm of EBITDA between US$40-60/bbl Brent. We expect non-discretionary capex of only US$6mm net in 2021, relating to the abandonment of the well on the Lincoln field."


I believe this to be a good summary

[gregpeck7] 18/12/2020 09:03

For equity you may be correct

[d1nga] 18/12/2020 08:54

Game over sadly imo

[yasx] 18/12/2020 08:45

The bull case for Hurricane has in my view weakened considerably with the announcement this morning. I currently do not hold.

As for Tournesol, is that another 'last post' - one thing is for certain, whatever the merits of his technical views, he has (at best) a very vague understanding of making money from the markets. Look at this track record based on his own contributions - he is a perfect contrarian indicator.

[sbb1x] 18/12/2020 08:45

This will rise.