Hurricane Energy Share Discussion Threads

[senseman] 23/4/2023 18:33

senseman LSE 18.08
DANGER OF USING FORWARD PRIVE CURVE AS OIL PRICE FORECAST Today 18:08
In arguing on 18 April that HUR's P6 standalone figures were valid, CFO stated a Brent forward curve figure of $76 was used. See below a link (& quote therefrom) explaining the limitation of such approach and how it historically has been useless as a forecast. This approach was used disastrously by HUR in 2021 in attempting to restructure via 95% dilution. The approach takes no account of political events and what forecasters at the sharp end eg oil fund managers and those investing, actually think and back with their money. In light of most predictors forecasting 2023 highest ever oil demand fuelled by China reopening and a supply squeeze, basing P6 standalone cashflow on $76 Brent partly explains HUR's fantasy figures, and is wholly wrong.

hxxps://timera-energy.com/the-dangers-of-mixing-forecasts-and-forward-curves/
"Chart 1: Evolution of Brent crude spot and forward prices
Source: Timera Energy (based on ICE Brent Futures settlement prices)
These phenomena clearly undermine the logic that ‘the forward curve is a forecast of spot prices’. Why would a three-year forecast change every day, and by the same amount across the whole forward period, and by the same amount as today’s spot price change? Who changes their long-term forecasts every day? Who thinks that an increase in today’s spot price, perhaps caused by the weather or a well-understood physical event in the supply chain, has any bearing whatsoever on prices three years from now? What kind of implicit fundamental modelling would give rise to such a result?
The Brent price animation illustrates a very simple test: has the FC been a good predictor of Brent spot prices? The answer is that it has clearly been a very poor predictor indeed.
In the articles to follow in this series we will consider a number of econometric theories as to how the FC relates to physical markets. We will see that they often bear very little relationship to reality: and that the dynamics of FCs is a subject best studied empirically."

Another concerning aspect of HUR's figures is the projected 2023 OPEX average $45.5-$54.7 (mid range $50.1 - what CFO said HUR's figures were based on).
End June 2022 OPEX was $33.7 (CFO at 2022 AGM).
April 18 2023 OPEX $38.6 (RNS 18.04.23). That is $4.9 (say $5) increase in 9.5 months.
Since the cost variable is decreasing production, which to date has been linear - it is hard to see how $38.6 OPEX will, by end Dec 2023 (18 April + 8.5 months), increase to average $50 for all 2023. That is, it would need to increase by $11.4 pb by end Dec 2023 just to REACH $50. And increase significantly above $50 by end Dec 2023 to average $50 for 2023.

HUR's figures are undercooked by at LEAST $5 re Brent, and overcooked by at least $5 on OPEX forecast. That is, by at least $10 a barrel. Over 4 remaining offloads this year, +4 more next year - and +1.5p.p.sh magically appears.

This CFO failed to buy bonds at 30/40c in $. And whose July 21-June 22 forecast was +$150mill wrong.

[fatfatfatfat] 23/4/2023 16:42

Many thanks to senseman for the feedback. Based on this Q and A, I have a feeling that this so called being taken over affair was not conducted with my best interest in mind. As a loyal share holder for the last 5 years, I will cast a NO vote.

[marmar80] 23/4/2023 11:43

Scottwhite,
in a practical way, maybe you know, how can you trade DCUs on the Matched Bargain Facility if they will be sitting on your current brokerage account?

[soilderboy] 23/4/2023 08:57

Thank you very much for taking the time to post in detail. I, a long-term holder, could not attend although deeply concerned and underwater.I will spend some time and try and digest this properly.Many thanks.

[kooba] 23/4/2023 07:31

Thank you for posting..though seems they were somewhat defensive as always.They have a good relationship with the NSTA ..i doubt that very much.PRAX did a deal to win not necessarily to be fair..well its a tough world out there , why would they?A lot of "trust us" when there seems very little trust as are the same executives that tried to stuff their own shareholders less than 2 years ago.

[livethedream] 23/4/2023 07:30

Senseman - many thanks for taking the time to pull together such a detailed set of notes. Appreciated thanks.

[livethedream] 23/4/2023 07:29

Scottwhite1 - thanks for the confirmation that you had a response on this. Typical of this board at HUR that they gave so little forethought to such an obvious point in relation to private investor holdings

[senseman] 23/4/2023 00:35

senseman LSE Sunday 00.34
PRESENTATION - MEETING REPORT(S) - FURTHER INFO Today 00:34
PART 4
20. Why are HUR's communications & modus operandi always so bad? eg: (i) stating re P8 that the NSTA would not give 'sufficient comfort - language so woolly and unspecific so as to be meaningless (ii) issuing an RNS today (18.04.23 7.00am) containing relevant information too late for attendees to access pre-meeting.
A: (CEO) (i) that was the language NSTA used in communicating to HUR it's position, so we used it is communicating in P8 RNS (ii) apology for today's late RNS
NB: The P8 fuller explanation given by CEO amounted to - NSTA would not give us specific OK undertaking ahead of time (as per usual practice), so we decided we could not take the chance.

[senseman] 23/4/2023 00:07

senseman LSE 23.56
PRESENTATION - MEETING REPORT(S) - FURTHER INFO Sat 23:56
PART 3
19. PIs (a 21% block) consider the Scheme horrifically unfair. Why does not Prax immediately improve it's offer to gain greater PI support?
A: Ignored in P, asked in M. Prax refused to answer question despite question repeated 3 times.
NB: Prax later stated to Picsmaister that offer constructed to beat other FSP parties, ie: not on ‘fair value’ assessment.
20. Has any other party expressed interest post Prax offer announcement?
A: Stifel - HUR are not allowed to answer that question.

Please could Picsmaister or any other attendee opine re accuracy or otherwise of above. Also post any omissions etc

[senseman] 23/4/2023 00:05

senseman LSE Sat 23.53.
PRESENTATION - MEETING REPORT(S) - FURTHER INFO Sat 23:53
PART 2
11. What confidence can SHs have in HUR's risk assessment & P6 standalone cash production figures when, one year after the 2021 failed High Court 95% restructuring attempt, at bond due date, it's risk assessment proved overstated, and cash projections understated by circa $150 million in a single year?
A: Ignored in P. Asked in M. Answer - only POO (which no one could have predicted) made us $150mill out in 12 months. You can trust us and our figures. We have used POO forward curve figures @ circa $76.
NB: POO forward curve figures historically cautious by $5-$10pb. Take no note of political climate eg: China re-opening & possible supply crucnch.
NB: Answer was drivel lies. In 2021 Judge ruled even on HUR’s own POO figures bond money would only be $10-$25mill short, borrowable from multiple normal sources if needed.
NB: Judge’s estimate after Hearing showed HUR’s accounting for court purposes had written off/not included circa $50mill, ie: HUR tried to bury $50mill (separate from POO issue).
12. Prax - Why do you have confidence in and plan to retain, HUR's CEO & CFO, in light of Q11 above? Also, when HUR's relationship with the NSTA has failed?
A: Ignored (both parts) in P. Asked in M. Prax declined to answer. HUR CEO Maris seized question. Answer – HUR excellent NSTA relationship. Also, (astonishing not RNS’d(my comment)) NSTA some wks/months ago gave permission for crucial P6 production metric to be changed from 300 to 360psi (or other way around - techies please explain). This has enabled & explains why P6 reserves? have been upgraded to extend P6 commercial life & barrelage to 2026 (again techies, please explain the 300/360psi metric & import)
13. In the last 2 ERCE reports, the 2P level of oil in P6 effectively increased by around 3m barrels (ie: it did not materially drop despite oil being extracted for the last year). Please explain the reasons, and by how long this extends P6's projected economically viable lifespan.
A: See 12a above Answer. Ignored in P. Asked in M.
14. Prax - (i) why cannot HUR remain AIM listed until 2026? (ii) how soon will the first added production be brought into HUR?
A: Ignored in P. Asked in M. Prax – ignored (i). Stated ‘we plan to’, no specifics, trust us.
15. Why is Court vote being held 15 mins before Scheme of Arrangement vote?
A: Ignored in P. Asked in M. Stifel answer – both votes held at 4 May General Meeting. HUR need pass 2 hurdles (i) for Court - 50% of SHs who vote– a broker representing say 500 SHs counts as 1 vote. (ii) for Scheme – 75% of votes cast – 1 vote per share held.
16. When P6 pump was previously changed over, natural flow almost matched pumped flow. What is natural flow rate expected to be should pump changeover be necessary again?
A: Ignored in P. Unasked in M.
17. If YES vote is 75%, is the deal binding on ALL SHs?
A: Ignored in P. Unasked in M.
18. Why is HUR confident the NSTA will agree the Scheme?
A: CEO - Because we have excellent NSTA relationship

[senseman] 23/4/2023 00:03

senseman LSE Sat 23.51
PRESENTATION - MEETING REPORT(S) - FURTHER INFO Sat 23:51
PART 1
NB: Read in conjunction with senseman post Wed 08.08am ‘PRESENTATION - MEETING REPORTS’. Further info below, for simplicity as per 19 questions emailed to HUR format.
NB: P = HUR Presentation 18.04.23. M = following Q&As 18.04.23

1. Will DCUs remain under ISA umbrella? Explain the difference between Class 1 & Class 2.
A. HUR do not know. Scheme announced prior to ascertaining. Because of PI concern it recently wrote to HMRC for decision. HMRC cited a 30 working day response time – between mid-end May, ie: after 4 May vote. Only difference between Class 1 & Class 2 DCU (SHs can opt which one) is one allows payment 6 months later than the other, if such preferable for tac purposes.
NB. HUR advised PI’s the Scheme should be supported despite not knowing (or caring) if DCUs remain under ISA umbrella. PIs hold circa 39% of shares not owned by CA or Kerogen.
2. Why were not a RANGE of Brent sensitivity figures included in the cash production P6 standalone figures estimates?
A: Ignored in P. Asked in M but unanswered – waffle.
3. Why have the CEO & CFO's 2022 AGM comments that P6 catastrophic failure risk was minimal now been consigned to history, and the risk now mutated into major?
A: Ignored in P. Unasked in M.
4. On 27 March, Hurricane communicated to a SH that up to another $60m would be needed in wind down costs on top of $60m already escrowed, leading to only 0.83p expected dividends per share in 2024. Explain the reasoning/cost breakdown for the new $120m wind down figure.
A: Ignored in P. Asked in M but unanswered – waffle, ‘trust our figures’.
5. What is current OPEX April 2023. And projected 2023 OPEX average?
A: Ignored in P. Asked in M. OPEX April 2023 $38.6. 2023 likely average $45.5-$54.7.
NB: OPEX stated in 18 April RNS 7.00am day of M.
NB: OPEX June 30 2022 AGM $33.7. 9/10 months later April 2023 $38.6, ie only $5pb rise in 9/10 months. Since production declining linear slowly, difficult to see how 2023 average will exceed range low of $45.5. CFO - HUR figures based on mid range $50.
NB: HUR 2023 average OPEX cost figures thus likely overstated by $5pb
6. Is there opportunity to develop the Lancaster sandstone reserves of 20m barrels of oil? If not, why?
A: Ignored in P. Unasked in M.
7. Which party was the principal instigator of the Irrevocable Undertakings? Prax, HUR or CA?
A: Ignored in P. Asked in M. Answer - Prax. Refusal to answer if offer conditional upon Irrevocables. Or if HUR, CA or Kerogen fought against.
8. Having restated in a recent RNS it has no confidence in the BoD, have CA made clear what action it will take if 25% vote NO? If so, what action?
A: Ignored in P. Unasked in M
9. Will the CEO, CFO & Chair resign if 75% YES is not achieved?
A: Ignored in P. Unasked in M.
10. What are FSP expected total costs?
A: $3.5mill. Ignored in P. Asked in M.
(to cont)

[senseman] 23/4/2023 00:01

senseman LSE Wed 08.08am
PRESENTATION - MEETING REPORT(S)Wed 08:08
No juice to post yesterday. No time today. PIcsmaister intends to post report when time allows. I will add if and when I have time.
BASICS
10-15 SHs attended, 6 asked questions. No time to discuss stuff before kick off.
Pics & I sat side by side to divi questions up. He played good cop, me bad.
3 others clearly not short term holders chipped in with serious queries to break things up nicely. The fourth clearly new, whose phone kept going off and yapping, asked Prax silly questions allowing them to repeat how great the deal was. He later stated to Pics he was new SH so bought at 7ish for the deal upside & thinks Prax great.

NOTE: Both the morning's RNS and Presentation clarified (to some extent) much from the 19 questions +30 SHs emailed, so yaa boo sucks to those who said it was a waste of time.
NOTE: We were again seriously attendee and questioner light. Had we 2 more LTSH to play good cop bad cop on the other side of the aisle, we would have done better. Pics & I both bust a gut to attend and were peed off others didn't make the effort.
NOTE: Mr Stifel & Mr Dentons solicitors were there front row 5 grey suits to ensure neither HUR not Prax said anything out of order.
That said, Q & A lasted 1hr.40mins (a long time) 10.40am-12.20pm needing Chair Wolfe to call an end twice. The platform had to work hard, were clearly under pressure and glad to wrap up. Pics & I rather knackered & stressed

PLEASE could other 3 (or) 4 other questioners + other attendees show themselves and report even briefly re yesterday. I meant to collar the 3 questioners afterwards to chat but erred via tiredness in falling for being waylaid by Mr Stifel then it wrapped u - think by then rooms' booking time was up. Only spoken wit Pics by phone briefly since so don't know whom else he spoke with.

SPECIFICS: Amount of good detail stuff revealed, uncovered on RNS or Pres. No doubt Pics will start the ball rolling. other attendees please chip in, and I will add if and when I have time. If I don't have time, I don't

[scottwhite1] 22/4/2023 21:58

Livethedream - I had a reply from AJ Bell to confirm the ISA & SIPP status would remain as the DCU’s would be as a result of a Mandatory Corporate Action.

[wbodger] 22/4/2023 12:48

If they don't delist them what was the point of DCUs? They might just as well have issued 'B' shares (although kooba did answer that a few pages ago: AIU him they need the full ownership to get the tax write-offs).

They should have bought out CA, put pressure on for a 5.19 pps Return Of Capital, and made a full bid when the share price was under 3, which it might have been after the cash return. If they had added their .83 to 3.00 pence it would have looked attractive.

[marmar80] 22/4/2023 12:28

Also here. If my broker delists HUR, where the DCUs will be lodged and then how I will be getting the semi-annual payments and when. Then if DCUs are lodged to my brokerage account, how I can trade them on the MBS platform? Many unknowns and not much time to find out left.

[livethedream] 22/4/2023 12:18

I have a similar dilemma - whether the proposed DCU's can be retained with a SIPP and an ISA to maintain their tax free status for any future payments.My broker AJ Bell have not been particularly helpful in providing any information on the situation - has anyone else had any guidance from their brokers on the situation likely to arise ?

[wbodger] 22/4/2023 00:07

I have been wondering about the mechanics of the DCUs. I believe my Execution-only Broker will not be set up to administer ongoing DCU dividend payments not associated with unlisted shares (ie. Prax). The shares the broker holds in its name on my behalf will be partially paid out and then replaced by DCUs, which will therefore have to be apportioned to actual accounts. I fear that my broker will tell me and others they do not handle DCUs. Perhaps I can get a certificate, but then I can't believe Prax will send out DCU dividends by mail twice a year to all DCU holders. (There are two billion shares in issue.) An electronic payment system will be needed and accepted by my bank.

I also wonder if the Condition of approval by HMRC will pose a problem. The value realised on disposal of shares through the Scheme will cause a Capital Gain/Loss in fiscal 23/24. What Realised Price applies, 6.02 pps? Or some other figure, 4.15 pps? (In which case 1.87 pps would presumably be a Return Of Capital.)

If these questions have been asked and answered in the Q&A I would be grateful for a pointer.

[tradoil] 21/4/2023 12:06

Sold mine . Taken a tax loss. End of a long and painful journey. Bored of the saga. I extend my thanks to Laserdisc for his relentless and quality insights over many years . Others too. Good luck .

[marmar80] 21/4/2023 11:05

Ophorst again added. Retail still selling

[marmar80] 21/4/2023 09:07

Rising share price tells me that not many retail holders are left there selling shares and moving somewhere else.In my opinion the funds will be buying until the voting and maybe in a hurry at some point.

[lovewinshatelosses] 20/4/2023 12:47

I voted no and have now sold all but a few left in a trading account, which I will dump for a tax loss at some point. The historical management failures and that of the current BOD IMO as well...to put it politely, means I personally trust them less than I do a politician. That deal is simply too opaque. Again, to put it politely. I do not trust any of them. Good luck to those of you who feel differently and also well done to those of you who are going to be profitable here regardless of whether the deal goes ahead or not. I only wish my own average was so low!

[marmar80] 20/4/2023 11:31

Ophorst added again. Unless you have a brilliant idea to move your money somewhere else, think twice before selling around 7.50p.

[marmar80] 19/4/2023 18:30

Any ideas why there is DCU Class 1 and DCU Class 2? Which one is better for us

[wbodger] 19/4/2023 17:30

Looking at that calculation again*, their holding of 1.6% (about one sixtieth of the shares in issue) cost them something under £2.5 million, and if the Scheme goes through and the April lifting allows the 5.19 Return envisaged plus 0.83 pence (=£16.6 million) from Prax, they will get 6.02 pps on 32 million shares,or £2.08 million. They will be betting that difference, £420,000, on future payouts of the DCUs up to a maximum of 6.48 pps times 32 million shares. Their bet is £420,000 possible loss against a possible profit of up to 5 pence a share, or £1.6 million.

Seems good business, although that 6.48 is the maximum, and only happens if the whole 12.50 pps is paid out however long it takes. If that analysis is right Ophorst are making a good bet, and will be voting Yes.

*Approximate figures, rounded.