Hurricane Energy Share Discussion Threads

[marmar80] 17/3/2023 22:02

I am tired of stating facts here. Vote NO.

[kooba] 17/3/2023 22:00

You might know the life of these pumps is estimated at 2-3 years I understand..the pump on 6 was switched over to the backup March 2021 I believe after the first failed. So as stated they think the one they switched over might be able to be restarted but no guarantees I guess, I figure a full workover and replacement would be economically unviable...factors such as rig availability and weather could also be an issue on timing and costs.

[kooba] 17/3/2023 21:43

It would appear not just cost but downtime without income and bearing the fixed costs for a long period would make the decision economically prohibitive depending on oil price production levels and expected economic limit...it might not be worth a workover. Equally Bluewater's views of waiting for work to be done without any offload incentives coming in..a major income factor on the contract might be an issue. If the FPSO goes there would be no chance of contracting and fitting out another i would imagine.

[kooba] 17/3/2023 21:34

Answer to question I raised Nov 22As was explained at the AGM, while each well has two downhole Electric Submersible Pumps (ESPs), only one is running, with the second available as a "back up". Depending on the cause of any "issue" with the ESP, the Company is faced with a choice ofSwitching between ESPs through a ROV visit to the wellheadEngaging a rig to visit to wellsite and perform a workover to replace/repair the ESPDoing nothingThe cost and time of performing each task varies, dependant on many factors although guidance was given if all equipment and services were freely available, and the weather favourable, the ROV approach would take of the order of 6-8 weeks and cost, in round numbers, in the region of US$500,000. A workover would, again in round numbers, cost in the region of US$30-40 million and take 6 months. The decision to perform any of the tasks would be an economic decision and be highly dependent on the circumstances at the time, including equipment and services availability, weather conditions (both actual and predicted), time of year (weather impact), the current and predicted production rate, the current and predicted oil price, etc. The specific question asked at the AGM was, given the issue with the pump previously encountered, what was the chance of success of it restarting if swapped? The answer was that there was a 75% chance of it restarting but its performance levels would be uncertain.

[lovewinshatelosses] 17/3/2023 20:58

Spent a bit of time reviewing this 'deal'. I would rather lock in a zero than accept this highly dubious offer. IMO, the loss would be far greater for the BOD than me. So I am going to vote against it. Good weekend all.

[flyinghorse1] 17/3/2023 20:42

I see in the Kerogen Irrevocable undertaking document the current Hurricane management get a fat bonus for seeing deal thru. (Kooba Q)

One of the major "selling point's for deal being accepted " was ESP failure. I would like to see the cost of an ESP workover changeout as this could be paid for easily by current cash. (my estimate circa £15mm for a twin esp redeployment) so is that risk they state really a big risk-its just something you get on and do as part of operations.

On the plus side for the DCU consideration is the PRAX E&P team is that Iain McKendric -ex Ithaca is named(I don't recognise the other two) so if they are serious about building an upstream E&P arm of Prax the time could be right.
FH

[porrohmahnn] 17/3/2023 18:58

I mentioned the possibility of Prax (Hurricane Group) perhaps acquiring Foinaven. Out of interest, if Aoka Mizu was to disconnect from the Lancaster turret at some stage in the future and move to Foinaven, once an appropriate turret and associated subsea infrastructure has been installed there, wouldn't the Lancaster Field "recharge" itself (lower water contact, improved pressure, better flow rate) after a period without any production and could Aoka Mizu therefore be used to subsequently switch backwards and forwards between Lancaster and Foinaven at appropriate intervals in order to optimise production from both fields? Or is there a limit on how long a turret can be left disconnected from an FPSO? ISTR that, when not in use, the turret can be submerged so as not to represent a danger to shipping.

[scaleyman] 17/3/2023 18:54

...as was the plan bombed by Judge Zacarolli???

[cashandcard] 17/3/2023 18:19

Horrific deal guys. This is organised theft.Cash

[porrohmahnn] 17/3/2023 18:13

Here's a possible scenario. The scheme gets approved and shareholders MIGHT get 6.02p in the short term (not guaranteed though). Prax then acquires some additional assets (Foinaven?) and spends the next three, four or five years designing and installing the necessary infrastructure to resume production. Prax gets the benefit of Hurricane's prior tax losses but doesn't start production from any acquired assets until after the DCU term expires and, meantime, charges the new investments to get the acquired assets operational against Lancaster profits, thus making Hurricane loss making. Won't this mean that Hurricane shareholders get nothing from the DCUs?

Would it be better to reject the Prax offer and hope that the UK Government changes the flaring rules and/or windfall taxes to make additional drilling / well intervention on Lancaster cost effective and, meantime, just keep our fingers crossed that the ESP holds out? Worst case, we won't be much worse off than the 6.02p and, best case, Lancaster might continue producing for five years or more (especially if oil price rises).

It seems to me that Hurricane is being sold for 0.83p per share plus the free cash up to and including the late-April lifting. I'm struggling to see how we get the other (up to) 6.48p.

Am I missing something or is this an extremely bad deal for existing shareholders? If so, why have the two biggest shareholders backed it?

[marmar80] 17/3/2023 17:25

At 6.70p mcap is £133m. Cash end of February: $140m unrestricted plus $60m restricted.

[evilblues] 17/3/2023 16:39

What makes you think the share price is heading below 5p..?

[kooba] 17/3/2023 16:24

Good question and needs answering can't see how even a legally enforceable promissory agreement is tradable..but maybe there is a way? some may want to jump out..or be forced to...while others might take a punt on the full DCU earn out being hit. Again we need more detail on the DCU component to see if it is genuinely realisable up to stated 12.5p.

[kooba] 17/3/2023 16:20

Ok so the thing i am trying to establish on the DCUs is what a 17.5% revenue share actually means ..in some comms they refer to 17.5% net....My initial reaction was we would get 17.5% of the net after all costs that currently filters down to the balance sheet after providing for a big old cost base!But then in an example on the presentation Maris gives an example if Hurricane acquired production assets.If Hurricane bought in another 5000 bopd it would benefit DCU owners by 1p per year.So reverse engineer that5000 bopd at 95% uptime 1.73m barrels per annum.Lets take $80 as brent basis. So $138.4m total revenues.17.5% of that revenue is $24.2m which gives you the 1p per year.This indicates then that the 17.5% revenue is total revenue so the same as Bluewaters 8% cut on well 6.So if this applies to well 6 revenues too ( difficult to see how it doesn't) it makes a dramatic difference to my interpretation of what the DCUs can produce.If we take 7000 bopd average over the next 12 months for W6 with 95% up time and $80 brent then that would pay out 1.4p per DCU and would keep paying to economic exhaustion.Still needs confirming and some further assets in there to be able to see the full 12.5p by end 2026..but if the share is 17.5% of total revenues you can see how we get there.If a total of 12.5p is genuinely achievable then this is a better deal than any wind up in my view. We get 6p out which is basically most of the cash now and continue getting meaningful revenues from W6 and potentially de-risking additional production up to the 12.5p or end 2026.The company needs to better explain the DCUs and how they offer the genuine value to expiry they claim then this all makes more sense as to why the shareholders totalling 45% are on side.Any thoughts?

[porrohmahnn] 17/3/2023 16:04

If the scheme goes ahead, will the entitlement to DCUs (if any) be a tradeable asset and, if so, how?

[marmar80] 17/3/2023 15:36

Thanks for sharing. In fact I don't care who that Prax is. I care about the way Hurricane is being sold (for less than own cash!!!!!) and care about immediate return from this old investment.

[kooba] 17/3/2023 15:25

Worth a view..think its just been added to Hurricane website.https://players.brightcove.net/5116773131001/default_default/index.html?videoId=6322639039112

[kooba] 17/3/2023 14:10

The management are at least aligned to see shareholders get the full payout ...fine by me if shareholders get 12.5p!

[wbodger] 17/3/2023 14:01

Say it falls short by 2 pence. That's a £40 million shortfall, because 2 billion shares. (The offer at 2 billion times 10.5 pence would be between £200-210 million, instead of 2 billion times 12.5 pence, £250 million maximum.) No wonder Prax agreed to that. Pay bonus of £3.25 million because the acquisition made enough to cost the full £250 million? If it didn't there is no bonus? They aren't paying the DCUs out of their personal bank accounts, they are a levy on Lancaster profits. Not enough revenue, no bonus.

Chickenfeed of course, they would be happy to pay the bonus. (It would mean much more revenue than they expect.) Prax really don't expect to have to pay £250 million and shareholders shouldn't expect to receive it.

I can't complain. It's irrelevant unless I get 12.5 pence a share, and if I do I won't begrudge a bonus.

[kooba] 17/3/2023 12:48

I get you..but do they also keep their jobs too?Management Transaction BonusIn accordance with the terms of the management transaction bonus scheme approved in July 2022, the Hurricane Board (excluding members with an interest) has resolved to make a payment of £0.9 million in aggregate to the executive directors and staff, conditional on the Scheme becoming Effective. In order to align rewards under the management transaction bonus scheme with the deferred element of the Acquisition, a contingent payment of up to £3.5 million in aggregate, will be payable in full only if the full consideration envisaged by the Deferred Consideration Units is ultimately paid. Prax has consented to these arrangements pursuant to Rule 21.1 of the Code.

[marmar80] 17/3/2023 12:17

Then Stifel bought 3.3m at 7.50p. Easy money. Perhaps today bought for 6.60p and has an average close to 7p. How good is to sleep with the insiders.

[marmar80] 17/3/2023 12:13

Stifel sold 4.2m shares for 8.50p yesterday. People who were aware of t&cs before us and had time to plan all actions yesterday morning.

[wbodger] 17/3/2023 11:49

I was just trying to see how CA get their value out, given that they are planning to wind up their own fund this year or soon after. Once they hand over their shares they will have no influence over Prax. While they have 29% they have powerful influence in HUR boardroom. Giving that up for no influence on Prax seems daft.

Well, Bernstein isn't daft so there must be some wrinkle. Until I see it I'll sit tight I think. (There's no point selling into this market controlled by Stifel. The share price is headed below 5 pence but there will be an increasingly wide spread so you won't be able to get back in. That strategy won't work.)

Meanwhile I will be keenly watching Crystal Amber's Interim Results to find out how they hope to turn £36 million into the maximum 12.5 pence a share, or £74 million. (The minimum amount from their 590 million Hurricane shares is £36 million if Returns Of Capital total 6 pence a share, not even break even for them)

Regarding the upside, I'm pessimistic that CA won't have any real influence over Mr Soosaipillai but I will read the small print when the Scheme is tabled. And will see if Mr Bernstein has anything to Twitter next week.

Generally, it looks like a very poor decision by CA to withdraw their motion to remove Maris and Chaffe right after the court judgment when Stifel threatened to resign as Nomad unless the motion was removed. Because guess who is now the most active Exempt Principal Trader who is exercising total control over the market in Hurricane shares: Stifel Nicolaus.

Chinese wall or not, surely nobody can argue Stifel has been independent when trading Hurricane shares during this ridiculous FSP? They will argue, what do you expect, investing in illiquid shares on AIM? Well, who made the market illiquid? Stockbrokers with sticky fingers. Who can trust AIM, if the market is rigged by stockbrokers?

Maybe start by allowing other market professionals to be Nomads.