Hurricane Energy Share Discussion Threads

[kooba] 20/3/2023 17:43

CA having irrevocably accepted the offer are not able to sell any in the market until the shareholder vote has been taken. But as sense says they are not under any hard time line to return money to shareholders , but as known they had informed Hurricane they wanted to exit the holding..this deal means shareholders get the maximum money out short term and effectively have a bigger upside on well 6 than they did as shareholders.

[marmar80] 20/3/2023 16:45

With CA selling now price would not go down much lower than is today. I even think we would see quickly a buyer (one of those 11 teams losing the bid war) for the 29% stake.

[porrohmahnn] 20/3/2023 16:42

With CA committed to winding down the fund by 31/12/2023, they have a choice of selling their sizeable investment in the open market or getting some kind of deal from a suitor. If they try to sell nearly 30% of Hurricane on the open market, it's hard to see how this could be achieved without depressing the share price. Their backing of the deal is therefore beginning to make a bit more sense to me. The DCUs should be a tradable asset according to the terms of the offer although this is not guaranteed, nor is the value of the DCUs. It is conceivable that they could sell the DCUs before 31/12/2023, albeit for an unknown amount. Even if the DCUs are worthless, CA may consider that the Prax offer provides them a better outturn than trying to sell their holding on the open market in their required timescale.

[kooba] 20/3/2023 16:26

1/Can you point to the economic production till feb 2026 sense..The numbers the company use assume cessation August 2025 based on $80 bbl."The Board estimates that Hurricane will be able to deliver the following returns to Hurricane Shareholders from Lancaster production alone, at an assumed US$80/bbl oil price and incorporating an August 2025 cessation of production ("COP") using the updated ERCE CPR 2P production profiles and after adding the effect of corporate costs."2/The board doesn't stay the executives do..those guys are winners!! but the board would have been fully aware of the offers to consider as would the advisors handling the process and having a professional duty to ensure that best interests of shareholders ( now no bondholders) were considered.Also if someone wanted the business and had a good offer they could step in now..or do you think the irrevocables were part of a larger stitch up that CRS were in on..stuffing their own shareholders to help the executives ?? Joking there of course they seem to hate each other.3/As to Kerogen they had the ability just about to block the deal so I'm sure they were quite properly wall crossed and their approval was sought before the transaction was announced. They might have been forced into agreeing or the offer which gives the most liquidity available near term might have been pulled..who knows?I note in the documents that Hurricane stand alone would have kept back a large contingency against early cessation so would not have looked to distribute more than the original 3.1p near term.

[senseman] 20/3/2023 16:19

Koob
Would be save point save that we previously mutually agreed that as costs were opaque and variable if one-offs were payable, a view could only be taken over several offloads and viewing of 6 monthly report. HUR's cash history has been characterised by inexplicable small monthly increases followed by inexplicable large monthly increases.

[kooba] 20/3/2023 15:58

"$10 mill costs overstated x 3 months" Happy to adjust if there is any evidence at all that your $6-8m is realistic. There is no evidence the fixed costs have dropped from historic $10m a month levels..there is evidence that there is likely cost inflation.If you take year end $122m and then end feb $140mWe have 2 months costs and one offload.And we go up by $18m.Gross 530k at $81 about $43m BW incentive $3.43m leaves $39.5m so from that we get $18m net cash looks like over $10m costs to me?In terms of month ends it does depend on the offload cycle for the official cash position and at the end of May we should be close to half full all being well yes...but i make the offload after that early July. The cash is of course incrementally increasing but not at the rate some think.

[senseman] 20/3/2023 15:14

add the AM half full - yes it counts - it's cash sitting in the tanks
$10 mill costs overstated x 3 months
so yes it's a chunk off
yes we may get smacked by banking squall if $70-$75 Brent holds till April first 5 days - sods law if we do but it won't knock off 1p

so much to consider koob, but given history 3 things amongst others alarm me
1. 'at HUR BoD request' ERCE AGAIN revise upwards CPR 2 & now cite economic production till Feb 2026, & uprate Lancaster resources generally. Are we seeing the first shoots of an unveiling of true resources midway between CPR 1 & CPR 2?
2. the deal keeps BoD in place with fat bonuses. Likely only deal on table which does. I have no faith it is not a cherry picked deal encouraged from kick off (early Nov 22 was date of confidentiality letter HUR/Prax signed), and better ones were not pursued with vigour
3. Kerogen are not on the BoD. They are merely SHs like us. To agree the deal and
sign Irrevocable Undertaking to make the AGM a Russian election they must have been given access to flotillas of privileged info. How was that legal?

[kooba] 20/3/2023 14:49

"Our cash has increased since that time and 7.70p offee in May will be very close to our cash level (excluding the restricted 60m which will be also transferred to the new owner).End Feb cash $140mEnd March cash down $10m cost $130mOffload end APRIL $37m less incentive $34m less $10M cost.End April cash therefore $154mEnd May cash down $10m costs $144mSo i make the end May cash position little changed on where we are now..6pHappy if someone wants to show that is wrong on available information...don't think its far off!

[kooba] 20/3/2023 14:38

I would be delighted if anyone came up with an idea that gives a better return to shareholders ..stand alone doesn't..no one else wants to make upfront premium bid because of the risk. The only way of perhaps improving on this deal is a high risk acquisition plan with a new management trying to build up other production assets...if they get it wrong the cash has gone..also the returns could be very long term but could provide longer term value. I'm not entirely sure the major shareholders and that many pi's really want to throw that dice again.Just moaning that a deal is not high enough when its the best option available without credible alternatives and with some folks coming up with conspiracy theories of underhand dealings is nonsense and not helpful. Trolling the major shareholder who has held since pre float and rescued the company from the restructuring shows a level of delusion...i'm really very sure if there was a low risk route to achieving higher value here CRS would be on board if anyone has a plan! I get the feeling they are out of ideas with this one.

[marmar80] 20/3/2023 14:32

"Would folks have preferred 7.7p up front with no further upside which was a premium to cash or this which has potential to deliver 12.5p?"

BoD have said 5 months ago that cash offer at 7.70pps is not good enough.
Our cash has increased since that time and 7.70p offee in May will be very close to our cash level (excluding the restricted 60m which will be also transferred to the new owner).

So, my expectation would be:
A) return all cash as it will be before the transfer of ownership
B) provide some extras for a still producing well and something for the tax credits which are massive.

By extras I mean :
A) cash on the top of all returned unrestricted cash from accounts
OR
B) certain percent from future offloads and percent from any saved cash on tax.

[senseman] 20/3/2023 14:31

koob
i reposted your substantive comment on lse out of respect for your view & advising lse posters should read & consider it. that in itself speaks volumes.
so please bat straight & cease citing me out of context
'forget the dcus' clearly meant forget them 'for the moment' because we don't know enough about them for the moment and nothing can be seen in proper context if one is citing misleading worst case costs figure and Brent price. it clearly did not mean forget them period. being a wordsmith, you know precisely my meaning
at repetition risk i do not believe it reasonable to cite $73 when most analysts opine the banking crisis is a squall soon to pass, and goldman sachs have only reduced their next 12 mths forecast from $100 to $94, and maintain a $97 pb average for 2024 H2 (see link below)
i also believe citing $10 mill pcm fixed costs is excessive and put them between $6-$8 mill pcm. Of course these will rise but it will be a gradual process and production is holding up well. citing worst case scenario figures caused the bod in 2021 to opine that there would be a hugs shortfall in bond money(was it $80 mill short?) yet we ended up paying all on time with +$60 mill surplus.
i repeat - i posted your view on lse believing it merited attention - few would have done similar
hxxps://www.forexlive.com/news/goldman-sachs-slash-their-oil-price-forecast-brent-to-94-vs-100-previously-20230319/

[lovewinshatelosses] 20/3/2023 14:23

I think people have read the material, kooba. Many simply do not trust the management, nor anything that they have to say. I am one of them. Posters like senseman have put forward a number of points that add some weight to this opinion IMO. But you are entitled to your own opinion, naturally. Even if I had bought in at a much lower price than the current share price (if only!) I would still feel the same way.

[laserdisc] 20/3/2023 12:57

All documents and a couple of presentations on link here.
Prax mention future possible 50k production this will help to release some value from our tax losses, also i see a broker is mentioned to trade DCU's in future prax mentions governance of their co.Really all above my level, having been here for so long pleased its coming to an end in some form or other

[kooba] 20/3/2023 12:31

It's $10m a month costs but going up I'd wager , and on an offload month we pay 8% of revenue to the FPSO owner Bluewater.As just posted the information is largely there in the document but it perhaps could have been presented better and some niggling questions on transferability and governance of the DCUs better explained.As posted though and legally approved the Deal pays out more than standalone.Many will question the numbers because they believe the company will throw off more cash..Hurricane have been known to be conservative ( but that reflects on both models..ie if stand alone is higher ..so is DCU) but I think with the company's history that is not surprising.Really nor sure how those who think this deal is rubbish think they are going to get any better outcome right now. I get they are upset there is no big upfront cash bid..but there never was and I wasn't expecting one.I encourage people to actually read the scheme details provided.

[kooba] 20/3/2023 12:22

Extract from rns.The company actually states that the total return for shareholders through the DCUs is higher than stand alone on Well 6 revenues alone. The balance to get 12.5p would have to come from acquisitions. This is produced following the updated CPR. So we get enhance interest as we share on revenues before costs.Comparison of Potential Returns to Hurricane ShareholdersThe Board estimates that Hurricane will be able to deliver the following returns to Hurricane Shareholders from Lancaster production alone, at an assumed US$80/bbl oil price and incorporating an August 2025 cessation of production ("COP") using the updated ERCE CPR 2P production profiles and after adding the effect of corporate costs. The expected distributions are laid out below on an annual basis in pence per share and do not include returns that may be generated from asset outperformance or future acquisitions.Illustrative Lancaster returns to Hurricane Shareholders as a standalone independent business compared to the outcome pursuant to the Acquisition under the same production assumptions are presented below:Returns to ShareholdersHurricane Standalone8.17p Acquisition (through Special Dividends and DCUs)8.98p Holders of Deferred Consideration Units will benefit from 17.5% of all other Net Revenues, including from any acquisitions made by the Hurricane Group, from 1 March 2023 until 31 December 2026 meaning the Acquisition, assuming full value is delivered by the Deferred Consideration Units and the declaration and payment of the Supplementary Dividend in full will deliver Hurricane Shareholders 12.50 pence per share.In an orderly wind down of the business, Hurricane expects to pay for the ongoing costs of the business and the decommissioning of the wells and facilities, and return all of Hurricane's remaining cash and cash from operations to Hurricane Shareholders, with the last payment expected to be in 2026. In aggregate, the Special Dividends and Cash Consideration under the Acquisition total 6.02 pence per share, which, together with the 17.5% share of future Net Revenues directly from the Lancaster field, is greater than the sums that the Directors expect to be able to return to shareholders in an orderly wind down of the business, assuming that the oil price is US$80/bbl from now until COP.The expected cash return to Hurricane Shareholders is expected to be thus significantly quicker and, based on current oil prices, materially higher, before taking into account the potential risk from an unplanned cessation of production or a reduction in the oil price.

[brinks_matt] 20/3/2023 12:17

Is the sticking point Kooba's £10 million per month liability out of cash on fixed costs? Does everyone agree on that.

Is the 2nd sticking point the DCU and how value is calculated? I guess if you are going to the effort of designing such a convoluted deal, it begs the question of why management can't be open about the DCU calculations from the offset, to ALL the owners of Hurricane (including retail shareholders). It begs the question as to what information Bernstein has been privy to, and what he'll disclose this week.

Await his view on this.

[kooba] 20/3/2023 12:10

We still retain an interest in well 6 which nets to the DCU holders at about 70% of what we would get going forward as far as i can tell (rough idea) but we get the cash in the business out now.Not saying it's generous but I'm not surprised how it's constructed. Would folks have preferred 7.7p up front with no further upside which was a premium to cash or this which has potential to deliver 12.5p? The company estimate of cash distribution as a stand alone to economic limit in the document...based on $80 , think it's just over 8p by end 2026 if everything continues to current modelling and nothing goes wrong with production or oil price ( already is lower) that appears the only alternative to this deal.Might want to take a look.The only other option would be changing the management and letting someone else have a thrown of the dice to mimic Prax model of building production assets and utilising the tax credits. That means investing the cash and possibly issuing paper ..if one gets the right management they could create value over and above the potential cash distribution here..or they could F up and leave us well down. The current management tried to look for value enhancing deals last year and came up with nothing..they would not be the ones to do it !!

[marmar80] 20/3/2023 11:49

Cash end of February was $140m. It was after the offload. Oil has been taken over a month ago. True, the offload is every two months and another cash will be banked, but at this stage the tank is half full and in a month will be offloaded agains, so my assumption it is 145 at this stage.My point is that we are not selling a company that is at the edge of bankruptcy. We have cash and selling our resources for less than it is on the accounts.

[kooba] 20/3/2023 10:52

From 37021'..forget the dcu's - they are rank B in importance concentrate on oil not being $73 for long, we not being at a 10 week cycle yet, and costs not skyrocketing yet. 'Must have misinterpreted your keen interest in the DCU's.On other points Oil..see the curve previous post.Offload cycle..they are producing at 7700 last heard and that is declining every offload so take average 7625 to next , to produce 530k that would be 69 days (uninterrupted).On costs there has been significant industrial action in the North Sea over pay and conditions this is mounting and will impact some operations production and ongoing costs. Unsure of the workforce on the AM ..but demonstrates cost pressures in the offshore workforce.https://news.stv.tv/north/operators-warned-by-unite-union-of-tsunami-of-industrial-unrest-in-north-sea-oil-and-gasLast offload was 17th Feb so thinking next very end of April around 26-27th.

[kooba] 20/3/2023 10:22

Nope..i don't think you get a more open process than an FSP to attract the highest potential offer..the process was overseen by the Nomad and lots of lawyers..and the best offer is what is being presented to shareholders and supported by the two major shareholders. Perhaps folks should concentrate on the facts not conspiracy theories.Cranky ..me , nah but disappointed many do not really understand what they own or what they are being offered.I might do a breakdown of potential return to economic cessation of well 6 see what i get but i don't think it will make great reading for many. Taking the forward curve , the futures are indicating Brent at lower levels over the next few years.https://www.theice.com/products/219/Brent-Crude-Futures/data?marketId=5430847

[jacquibic] 20/3/2023 09:56

Bit cranky this morning Kooba!
What am I focusing on? You being what you accuse others of being not looking at it for what it is you say you have I checked your posts regards the restructure debacle (yes) so I will ask again are you not a wee bit concerned?

[wbodger] 20/3/2023 09:46

Just re-reading some of the back posts from the weekend, this from #37030:
"... presume the normal contracted arrangements with BP for the life of the well continue so the commercial price we get will be transparent ...",

BP should be open to an exit from their right of refusal on oil produced if Lancaster falls into the hands of a minnow competitor who plans to refine and market the oil instead of selling it unrefined. (Not really a competitor, of course given the size, but Prax might be able to keep Lancaster economical much longer than BP.) The clause isn't really worth anything, perhaps £1 nominal compensation to relieve BP of paperwork? But it's one reason to look carefully at how "economic" will be defined when Lancaster winds down and Prax starts accounting for it.

[kooba] 20/3/2023 09:13

Ha..you are concerned i don't bang on about the restructuring are you..you should check my posts going back then. I am focusing on understanding what is in front of us now ...and making sure i get my decimals in the right place , how about you ? Domesday scenario ha..i just know what i am talking about and am aware of the risks..the main reason cited that none of the "strong interest" wanted to offer better than is on the table,. They are industry folk who understand risk in oil operations far better than most pi's i reckon.

[kooba] 20/3/2023 09:01

Not sure you get that the cash only goes up on an offload..when there is no offload there is about $10m of fixed costs going out a month...so cash at end of March will be down on end of February. If you think it has gone up please tell me how??We get one offload every 66-9 days to get to around 525k on the last update of production 7700 and falling.So we have one offload against every moving to 10 weeks of costs.