Hurricane Energy (HUR)

[dspp]

Personally I smell a giant RAT with recent events at Hurricane....
Kerogen commissioned the technical review.
Now it has been published and share price trashed they want off the board.
Presumably so they can either buy or sell shares?

2 possibilities here :
1) Kerogen now want to sell out to Crystal Amber at 3p.
2) Kerogen now want to buy before a cheap take over (5-10p) from Spirit or Chryasor.

Today's director dealing simply adds to the questions.
Things are clearly bad at HUR. But are they actually as bad as made out ?
Or has "kitchen sinking" all the bad news with worst case scenario been a deliberate tactic.
Allow Kerogen / Crystal Amber to average down then sell entire company to first bidder.

Spirit Energy have got no money anyway. It's ancient history now but HUR demonstrated serious desperation when they brought Spirit on board. It's been one disaster after another ever since it happened.

RVF

1. IMHO it was HUR who pulled a fast one on Spirit, not the other way around. All credit to the HUR team to being convincing enough to get Spirit on the hook for that work programme. It does also say something about the Spirit team as well mind you.

2. Kerogen putting Alan Parsley in to HUR board was them putting the heavy guns in to see if anything could be salvaged. Check out his CV.

3. Now Kerogen are off the board good luck to them if they can recover anything like 9p, that would be very good if they can achieve it.

regards, dspp

[thehaggistrap]

^ exactly. 9p would be a decent price given recent issues.
.... but below Kerogens average of what I think is 14p?
however *if* they were able to average down then sell-on to highest bidder....
all of which makes me very suspicious that while things are bad they maybe aren't as bad as technical report?

there is clearly some value for a purchaser- especially if bonds can be delayed.
£100 million in bank, debt which can be offset against tax, Lancaster producing oil (for now), plus Halifax & Lincoln.

I am currently out at a huge loss.
Though will be frustrated if I sold at 3p bottom having held long for 6-years....

[PeterGray]

I think that may well be true. But will HUR be in a position to recover them? That's the key question.

[dealtn]

Richard Bernstein, Crystal Amber quoted in The Mail -

Activist investor Richard Bernstein, the brains behind the Crystal Amber fund, set tongues wagging last week when he raised his stake in the embattled North Sea oil and gas firm Hurricane Energy to nearly 11 per cent. Briefly worth more than £1billion in 2017, the AIM-listed company has seen its shares tank this year after its oilfields off the Shetland Islands suffered a series of downgrades. Bernstein tells me he believes the 'doom scenario is overdone' and thinks there may still be recoverable reserves worth far more than Hurricane's current £55million market value.

https://www.dailymail.co.uk/money/marke ... -Hill.html

RVF

He is clearly not an idiot, so I blame the sloppy reporting, but equity holders need recoverable assets to be a lot more than £55mio. There are outstanding higher claims than equity that need satisfying too.

[thehaggistrap]

^ The Hurricane fairy tale we all know (garden shed company discovers billion barrels and worth 60p) is gone...
However that is not to say the company is not worth something :

- at least another years production from Lancaster.
- possible remedial action on Lancaster (water injection or drill sandstone)
- Lincoln tieback
- Halifax
- £100 million in bank
- Debt which could be offset against tax by purchaser

For sure, the bonds due in 2022 are a valid concern.
However company isn't about to be liquidated tomorrow.
Right now all stake holders are snookered.
Without some kind of action then everyone will be worse off....

I fully expected Hurricane to be taken over for 6-10p before Xmas.
Been watching the story closely and my guess is that Kerogen are planning some kind of hostile bid.
Crystal Amber hanging on their coat tails and added more this afternoon.
The end game is clearly here.

[thehaggistrap]

^ My guess ...
Kerogen commissioned the technical report.
They put Parsley in place and removed Dr Trice.
They have since resigned from the board (... possible conflict of interest?).
Kerogen now about to make a bid for entire company (they also own Pandion & Zennor).

Crystal Amber got a sniff of this and hanging on their coat tales.
Meanwhile PIs are getting mugged of their shares for 3p.
Blatant.

[dealtn]

Meanwhile PIs are getting mugged of their shares for 3p.
Blatant.

I have no idea what you mean here so perhaps you can explain? (Hopefully in non-emotive language).

[scrumpyjack]

Meanwhile PIs are getting mugged of their shares for 3p.
Blatant.

I have no idea what you mean here so perhaps you can explain? (Hopefully in non-emotive language).

I guess the implication is that there is not equality of information. That a select few close to the company know a lot more than PIs do and so there may be 'a false market'.

That is an entirely speculative comment but it is a significant danger with the small companies on the AIM. The big city investors, who can do their own due diligence, are not interested in AIM stocks for various reasons. So PIs are in great danger of being 'shafted' by those with deeper knowledge.

It's one reason I have never invested in AIM shares

[dealtn]

Meanwhile PIs are getting mugged of their shares for 3p.
Blatant.

I have no idea what you mean here so perhaps you can explain? (Hopefully in non-emotive language).

I guess the implication is that there is not equality of information. That a select few close to the company know a lot more than PIs do and so there may be 'a false market'.

That is an entirely speculative comment but it is a significant danger with the small companies on the AIM. The big city investors, who can do their own due diligence, are not interested in AIM stocks for various reasons. So PIs are in great danger of being 'shafted' by those with deeper knowledge.

It's one reason I have never invested in AIM shares

Well I appreciate you didn't make the comment, and are only trying to find a possible interpretation, but I am not sure I would agree they are "shafted" or "mugged" given that the problem of asymmetry is known to those small, retail, private investors in such stocks. If the asymmetry is an issue then the time to be aware of it, and the choice not to play the game with such "rules", is at the time of investment, not in hindsight. (In the exact fashion you describe for yourself).

[thehaggistrap]

I have no idea what you mean here so perhaps you can explain? (Hopefully in non-emotive language).

I guess the implication is that there is not equality of information. That a select few close to the company know a lot more than PIs do and so there may be 'a false market'.

That is an entirely speculative comment but it is a significant danger with the small companies on the AIM. The big city investors, who can do their own due diligence, are not interested in AIM stocks for various reasons. So PIs are in great danger of being 'shafted' by those with deeper knowledge.

It's one reason I have never invested in AIM shares

Well I appreciate you didn't make the comment, and are only trying to find a possible interpretation, but I am not sure I would agree they are "shafted" or "mugged" given that the problem of asymmetry is known to those small, retail, private investors in such stocks. If the asymmetry is an issue then the time to be aware of it, and the choice not to play the game with such "rules", is at the time of investment, not in hindsight. (In the exact fashion you describe for yourself).

If you are arguing AIM isn't a level playing field then I would agree.

Crystal Amber buying for a reason... Similarly in the same week Kerogen (who played major role in funding EPS) vacated seat on Hurricane board without any explanation offered to private investors.

[Tinderboy]

Yet another "yes we have no bananas" RNS's

[dspp]

Yet another "yes we have no bananas" RNS's

RNS at https://ir.q4europe.com/Solutions/Hurri ... d=14834479

key bit is,
"In line with the Company's expectations, the 205/21a-6 well is exhibiting a limited decline in oil production rate accompanied by a limited increase in water cut."

Also the tidy away nicely money is being fully set aside.

Yes there are no bananas.

regards, dspp

[tournesol]

Surely the latest RNS did indeed contain some very significant news?

1) It said that abandonment costs had previously been secured by a bond underwritten by a 3rd party who collected a premium for so doing. That 3rd party has now decided that the risks have deteriorated to such an extent that they can no longer continue unless Hur lodges the full amount of abandonment costs in cash. Hur point out that if they do that there is no point them having the bond. The arrangement has been terminated and H have lodged 20 odd million in escrow to cover the abandonment costs.

2) Abandonment costs have been reduced from 30 odd million to 20 odd million. It seems to me probable that at least some of this reduction derives from the reduction in reserves which was announced previously. That created a situation where remaining reserves amount to about 21 months current production - in other words production will terminate in 2022. That's significantly earlier than was previously expected. Bringing the end date forward will, presumably, reduce the NPV of those costs, I think.

[tournesol]

I'm bemused at the idea that anyone would want to acquire HUR. What assets have they got that are even vaguely attractive? Are they even a going concern beyond end 2022?

[Tinderboy]

The silence is deafening from the new BOD's, I guess their priority remains salvaging their portfolio for future jobs, the new guy looks like the Stoolie he was hired to be, collecting a year or so's severance pay along the way to oblivion.
Im not even sure if the company is tradable at these levels, really sad times for all interested parties past and present, lots of folk ramped this to death and should hang their head in shame............

[FabianBjornseth]

On the Norwegian side, Robert Arnott's (ex HUR chairman)'s new company appears ready to give the basement play a go:

https://expronews.com/gg-community/basement-play-still-attractive-a-friday-north-sea-wrap-up/

[mearnsfool]

The report of brownfield work on the Aoka Mizu was an over egging of the pudding.

Both the work on the Aoka Mizu and the Haewene Brim FPSO, on the Pierce Field awarded to Global was nothing more than the engineering and construction contractor Wood Group being replaced with Global E and C as Wood Group's contract came up for rebid and the work was awarded to an other contractor.

That happens every 3 to 5 years in most cases.

[dspp]

A fascinating read, the other side of the Hurricane Energy story from an ex-OGA employee -

https://www.energyvoice.com/oilandgas/n ... -shetland/

Thanks for linking that. Indeed, fascinating .......

regards, dspp

[FabianBjornseth]

A fascinating read, the other side of the Hurricane Energy story from an ex-OGA employee -

https://www.energyvoice.com/oilandgas/n ... -shetland/

Another piece of evidence on how the project could go so wrong. I guess you have to give the previous management some credit for having the cojones to even silence dissenting voices within the OGA. And if that's the attitude towards the OGA, one can only imagine the groupthink going on inside the building.

[FabianBjornseth]

A fascinating read, the other side of the Hurricane Energy story from an ex-OGA employee -

https://www.energyvoice.com/oilandgas/n ... -shetland/

Another piece of evidence on how the project could go so wrong. I guess you have to give the previous management some credit for having the cojones to even silence dissenting voices within the OGA. And if that's the attitude towards the OGA, one can only imagine the groupthink going on inside the building.

On the other hand, it seems that Dr T used his influence and his reputation in the industry to prevent a dissenting voice within the regulator being heard. That is not a good thing but obviously suited the wider OGA agenda at the time. And it means critical information that would have better informed the private investor was not made public information.

RVF

It's hard to be a comedian on forums My comment was intended tongue-in-cheek.

To be clear, such an act in itself is reproachable, but also suggests an blatant unwillingness to entertain valid downside cases. HUR was not just fighting dogmas and skepticism to get to the EPS financed and approved, but also the unfortunate fact that the fluid samples below structural closure contained only traces of oil (as per the September 2020 presentation). This and other data invalidating the reference model was not given weight, even though it is evident that such challenges were brought forward by the OGA and prospective partners. This leaves willfull ignorance or incompetence as the options. I am not sure if it even goes into criminal negligence/misleading statement territory, the bar is probably very high for this on subsurface projects, but others with more experience may comment on this.