Hurricane Energy Share Discussion Threads

[senseman] 19/3/2023 12:11

I would add:-
8. It can't be argued that because CA & Ker recommend the bid, it is good for HUR. For Kerogen the quantum is peanuts, they covered costs by selling tranche earlier & likely want out just to clear irritant HUR from desk. CA are under 'seller's exit pressure so it is judgement call. Telling BoD price they wanted one way or t'other in my view error (should have cited higher) as allowed BoD to work backwards to BoD's personal advantage & tie CA up like kipper. I believe CA will in time view decision as bad judgement call. Deal suiting HUR & Ker does NOT automatically mean good for HUR or remaining 55% SHs.
9. At 12.5p straight cash I would have voted against deal for personal reasons but understood CA's acceptance and bore no grudge as understandable friends' parting of ways. I believe in supporting this bid/deal CA fall below 'natural duty of care' long term friend owes not to leave friend (us) which helped saved CA investment in 2021 in circumstances which diminish us when not necessary. In my view, bad judgement call.
10. I view horrific Irrevocable Undertakings as proof of Prax, HUR BoD, CA & Ker knowing the deal is not good for company HUR or any other SH. Other wise why their need for existence, particularly in draconian format? And why the need for such language, fact & figure skewed presentation/deal documents?

koob - re costs & profit is again where we must agree to differ without rancour. I don't accept HUR running costs are currently so high and will increase so dramatically, not do I accept citing $73 oil appropriate when a higher 'balance of probability figure' should be applied. My figures don't rely on $90 or $100 oil. Comment re FSP costs is valid but these will be excessive as a stitch-up job usually doubles costs. I don't cite AM rental escrow money as free spendable cash but as a cost-saving gift to Prax which needs taken into account when considering a deal good or bad. Put it this way - if you left a rented flat would be happy to leave your 2 months security deposit for the incoming tenant to benefit from, or would you want it back? In applying common sense in the past to HUR's future cost & profit projections I have been remarkably accurate, much more so that the BoD

[senseman] 19/3/2023 10:37

My objections in main are as follows:-
1. The 'bid' likely only one leaving BoD in situ, + bonuses. Given history, I have zero faith it is best for HUR, or beats 'no deal' + new BoD. This reason is HUGE,
2. At BoD's request, ERCE updated CPR now magically shows economic production till Feb 2026 + uprated reserves (I always said would be 2026 - or longer)
3. Well 6 catastrophic failure risk hugely overstated - 2022 AGM Maris stated backup pump 'no reason why should not work;, and changeover timescale 2-3 weeks.
4. Market experts say bank squalls soon end. Most oilies downgrade 2023 average by only $10 & most retain $100 oil prediction end 2023 or sooner.
5. Unarguable by end May signing date HUR will have 7p p.sh cash, net of AM escrow funds held which make 7.8p p.sh.
6. Hard to argue, even net of AM escrow funds, HUR will not have 9p cash Xmas 23 & 11p cash end Q2 2024.
7. Decomm costs already held paid & secure in escrow

[evilblues] 19/3/2023 10:05

The sticking point is the question of trust on the DCU's Kooba. And there is quite rightly no faith in management whatsoever so to hope they've changed their tune, to hope Prax accelerate upstream etc is in my view still a bigger gamble than lobbying to block this deal. A simple weigh up of risk really.

[jacquibic] 19/3/2023 09:49

Hi Kooba having gone through your earlier posts (2021)you covered the restructuring court case extensively.
Was it not apparent to you then that those in control had schemed been economical with the truth lied through omission etc to try and prize 95% off the shareholders.
If the answer is yes do you not have any suspicions that history may be repeating itself?

[jacquibic] 19/3/2023 08:46

Let’s assume Kooba is accurate and 10p would be a fantastic exit price.
A possible explanation for CA and Kerogen signing an irrevocable would be a Guaranteed sweetheart of 4p paid end of 2023 to buy their DCU at a discount.
Prax buy Hurricane using Hurricane’s money then after a few lifts and maybe utilization of some tax credits bingo everyone is a winner.
Prax get the lot for ZERO CA and Kerogen are out of it with a respectable 10p and the PI are used to bridge the whole transaction?

[kooba] 19/3/2023 08:37

You are not explaining why you think it is worth any more than the offer..senseman is at least trying to put some numbers to this ..which i think where we are with costs and the oil price and declining production are rather optimistic. If i have time i might put an example of where we are with both alternatives..take this or crack on alone with same management.You say i am the only shareholder who takes a view that this is as good as it gets...apart from the 2 most important ones who are totally behind the deal who have probably done their own research. Crystal Amber having been invested here since before they listed and wants to maximise returns to its shareholders and kerogen a large specialist energy investor involved in multiple M&A deals in North Sea oil and gas.The views on a BB are not necessarily reflective of all shareholder views it seems.But hell i am allowed an opinion and do back my posts with facts rather then ..couldn't make it up comments with no justification...folks need to understand anyone who might have been interested has kicked the tyres and didn't even match the deal being offered..yet most think that there is plain as day far more value..maybe all th experts missed it??

[ngms27] 19/3/2023 08:08

Shareholders shafted by the BoD yet again.Unbelievable that they get less than the shareprice and get locked in!

[jacquibic] 18/3/2023 23:26

My accusation confirmed (chosen one!) it’s crystal clear to you but not one PI is aligned with your overview….out of all 12 interested parties not one was prepared to put £1 in of their own money so Prax won the auction with the best promise ( more conditions/hurdles than the grand national ) and CA & kerogen went head first for it as it was too good an opportunity to miss! YOU COULD NOT MAKE THIS UP

[marmar80] 18/3/2023 22:40

In your opinion, why does Hurricane pay Prax for this deal?It does, as is letting them take $200m+ for £87m.

[kooba] 18/3/2023 22:08

My expectation was not high of achieving anything over the 7.7p ..I have in the past been lambasted for pointing out the risks of a single declining asset..add now cost inflation pressures on production and a declining oil price and even without any early cessation of production the amount available to distribute on a wind up was going to be limited to below 9-10p in my opinion. So my initial thoughts on the deal were not great as the up front was not appealing and the earn out was without much detail. I've looked at it closer and still need more detail on the DCUs but from the presentation I think they rank for equivalent of just about gross revenues on everything produced..which could be 2.5-3p out of W6 and I strongly believe now looking at the tax position that Hurricanes new owners will indeed inject production assets to keep the tax credits alive in case W6 encounters problems. So I think the DCU earn out to 2026 could indeed pay out the full 6.48p in haly yearly payments which I believe would payout more than a wind up over next 2 years or so. Could do with more convincing from Prax on their plans and confirming the revenue share is as I believe..so hopefully more info on those points and on governance and comms on DCUs and whether they are transferable or likely tradable before having to make up one's mind.CRS and Kerogen are no idiots and i believe they would have had detailed meeting with Prax to get the irrevocable acceptance.By doing that they also must think there is no better offer to be had i guess and prefer this outcome to a wind down for their own investors.

[orchestralis] 18/3/2023 19:59

If CA are happy with the deal, then I am. My average is 5.1p, so hopefully will come out of this in a fairly good place. This has gone on too long and it's time to get it done.

[jacquibic] 18/3/2023 18:49

Kooba, are you invested in hurricane (cannot remember as read so many posts)if so out of curiosity which way are you voting?
Having read on here and LSE virtually every post in the last 2 days it seems you are the only poster who believes they (BOD)are painting a true picture and have got a fair market deal….what do you think is the probability out of all the investors who have posted that they are all delusional or have a blind spot to the reality when it comes to Hurricane?
Having read your posts you are very knowledgeable and respected by fellow long standing hurricane investors but can you see my dilemma why only you?

[marmar80] 18/3/2023 16:55

If trkhr immediate cash offer was 7.70p and other stuff was on the top of it then yeah, not many would be disappointed. People should say it loud at EGM, if called. This is not a bankruptcy case, however the upfront cash is just less than Hurricane has on the accounts, this should NOT be accepted.

[lovewinshatelosses] 18/3/2023 15:53

I simply do not trust this BOD anymore than the last bunch. Combine this sentiment with this frankly quite opaque deal, and I would rather have a simple one time cash payment and be done with this dreadful outfit.

[kooba] 18/3/2023 12:13

The chance of a hostile takeover with 45% of shareholders irrevocably accepting the current deal seems very unlikely ..they couldn't win! Maris said 12 parties engaged to make offers and 5 did make offers the other 4 were valuing below the current offers potential. What are the chances that anyone has missed the 4 month FSP window desperate to buy Hurricane at a cash premium but missed the chance!? I'm afraid many holders seem to value Hurricane far higher than anyone in the industry who have done their homework and know the risks to production...there is also risk in being able to use the tax credits. Whilst disappointing that there is not a higher up front cash offer this has been touted round to everyone and this is the best that can be achieved as an exit i guess.

[kooba] 18/3/2023 12:01

I make it you get 6.02p near term if the April offload is up to par not 6.48p...that is the maximum amount you could receive from the DCU instrument...that will pay out on a 6 monthly basis to end 2026.So if you buy at 6.7p you get 6.02p back end May early June "IF" it gets voted through so you are left with a .68p investment which as you say could provide with a huge potential leveraged profit of 5.8p.That would require W6 to pump to exhaustion and would very likely need a contribution from production assets brought into Hurricane..which is Prax stated strategy. If they do bring other assets into Hurricane the DCU's could still pay out to maximum even if W6 fails. I think Prax will want to move quickly to get other production assets in up and running as it makes it simpler to show continuity in production operations to utilise the losses..if they cease being a producer then using the losses could be a big question i believe.If the deal does not go through then we will have to see what the c suite come up with in distributing the earnings and are left hoping W6 holds up. Or whether CRS moves to change them...likely i guess. However with oil at current levels i get nowhere near 12.5p return once the company is wound up and well decommissioned and they will likely hold a fair amount of money back until both those are sorted.

[noirua] 18/3/2023 11:39

The ideal price to pay for a Hurricane share is 6p then you get the 'deferred consideration units' for zero if all the expected 6p is paid.

[noirua] 18/3/2023 11:20

As others see the takeover bid there is a chance that a hostile counterbid could still arrive. Probably less that 12.5p but with cash upfront taking the gamble on themselves rather than Hurricane shareholders. Nothing in the share price for that at present so it might be time to buy.

[noirua] 18/3/2023 11:08

March 17, 2023
Prax to acquire British oil producer Hurricane Energy for £250m
Hurricane owns a 100% stake in the Lancaster Oil and Gas Field in the UK North Sea.


UK: Prax E&P to acquire Hurricane Energy in GBP249 million deal


16 Mar 2023


Commenting on the Acquisition, Alessandro Agostini, Head Of Exploration & Production of the Prax Group, said:

'We are committed to building a scaled upstream division and have the financial, strategic and management capacity to complete further upstream M&A at pace.

Hurricane is the first step and the platform from which our upstream division will be built, as, together with our M&A colleagues we review the potential acquisition of further, complementary UK continental shelf upstream assets. We look forward to welcoming the Hurricane team as we build a scaled upstream division within the Prax group.'


Hurricane board backs Prax two-part buyout
Offer worth £249mn, or 12.5p a share, at first glance but the upfront amount is far less
March 16, 2023
By Alex Hamer

The deal structure means Prax could take over for just 4.15p a share, although 6p is a more likely price. The other cash is split into a supplementary dividend, dependent on oil sales from next month's lifting, and the more questionable 'deferred consideration units', worth 6.48p each. This would be paid when the Lancaster field had produced 450,000 barrels of oil. It has so far produced 200,000 barrels of oil.

[soilderboy] 18/3/2023 08:03

This whole transaction is very complicated and designed so. Nothing less than stealing the company and shafting LTH here.This is an outrageous deal. Smells of back handers once again.

[porrohmahnn] 18/3/2023 02:17

I've had some more thoughts about the idea that Prax (Hurricane Group) might buy Foinaven. According to Wikipedia; "WOSP is owned collectively by the owners of the Schiehallion, Loyal, Foinaven and East Foinaven fields; each owner company holds divided capacity rights in accordance with its ownership interest. It is operated by BP".

If Prax buys Foinaven, it gets part ownership of WOSP and therefore gains the right to pipe excess gas from Lancaster, thus facilitating a further well.

I can't help feeling that the WOSP owners and UK regulator have collectively contributed to Hurricane's recent predicament. The regulator, through tax and flaring policies makes it uneconomic to drill another well, the WOSP owners prevent a gas export solution, then one of the WOSP owners sells an asset to Prax that enables Prax to realise more value from Lancaster than the Hurricane can realise itself.

Time will tell if my suspicions are well founded or not.