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Hurricane Energy (HUR)

dealtn
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Re: Hurricane Energy (HUR)

#302604

Postby dealtn » April 23rd, 2020, 9:05 am

ReallyVeryFoolish wrote:
88V8 wrote:They have a 7.5% convertible bond of $230mio at issue, maturing 2022.

Might be of interest. Haven't looked into seniority or pricing.

V8

As a producer, HUR are likely able to refinance those at a more reasonable cost? Perhaps.


I would swap "possibly" for "likely".

Some risks have been reduced since the initial loan was agreed, but the price of oil has fallen too.

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Re: Hurricane Energy (HUR)

#303499

Postby Bubblesofearth » April 27th, 2020, 7:52 am

ReallyVeryFoolish wrote: If it isn't, civilisation as we know it will have been sent back to the 19th century.


We are not amused.

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Re: Hurricane Energy (HUR)

#303528

Postby dspp » April 27th, 2020, 9:40 am

The RNS for the CMD is here https://www.hurricaneenergy.com/investo ... atory-news

The pdf of the CMD presentation is here https://www.hurricaneenergy.com/investors/presentations

The webcast starts at 10:00

watercut is increasing .......

regards, dspp

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Re: Hurricane Energy (HUR)

#303569

Postby dspp » April 27th, 2020, 12:15 pm

That CMD presentation was about 80-minutes long. Some brief points on it and the accompanying updated slide deck & RNS from my point of view.

1 - There was no Q&A. Is it beyond the wit of UK companies to use a dial-in Q&A. Or written. Or is answering to shareholders (past, present, prospective) not really desirable ?
2 - Less than maybe 10-minutes in total was spent on the watercut issue. Yet the watercut issue is the single biggest matter affecting HUR valuation, followed by LinWar and any implications for Halifax, followed by bonds.
3 - I fully appreciate that most of the other stuff has to be said, but it can be said far more crisply to give time to dealing with the main issues in the depth and detail that they deserve.
4 - Weasel words. 200b/d/psi initial PI. That sent my ears into orbit - what are the PIs now ? Why say "initial" ? Did I mishear and misread.
5 - Watercut was not dealt with in the depth and detail it deserves. In no way at all. Whatsoever.
a > Co has previously said not rate dependent. So show a graph and prove it. Why didn't they show the non-rate-dependent graph ? The data looks suspiciously rate dependent to me.
b > Co has previously said temperature data supports perched. So show us the temp data.
c > Co has previously said pressure (? response? data supports perched water. So show us the data.
d > Or does the data no longer have the claimed signal in it ?
e > Co has previously said #6 well was dry, except that now it is at 7% watercut. About 9-months ago that was where the '7z well was, and now it is over 40% and climbing (not stabilising). Either the 7z well is beginning to suck in from perched water or it is beginning to suck in from aquifer water. Do the words coning mean anything ?
f > Co needs to show the working to explain why this is not coning up a fracture network.
g > Co can't seriously consider that a video cartoon is sufficient. Have they suddenly lost the ability to draw a well and reservoir cross-section, or are they worried about the implications.
h > Co has two wells that shareholders own. And the Co still cannot find a pen to draw a cross-section of the relevant wellbore and reservoir ! Unbelievable.
i > Co can't seriously think that we are confused by their always stressing average watercut.
j > Co needs to explain how you get half a million barrels of water perched. Either it is not perched at all, or if it is perched then it has humongous implications for the remainder of the reservoir .... where the fractures are .... where they are not. (and if that is to be expected across the whole of the reservoir that is a shedload of water to perch).
6 - Talking about running straddles in the heels is a big deal. You won't squeeze straddles of the size required down an ESP bypass on CT. It is a yank the completion job. And getting them to work in fractured reservoirs is generally almost impossible, and comes with quite significant operational risks (i.e. bugger the well up, for good - that is one of the two wells .....). Oh, and high costs. Or if they go other water-shut-off pathways then they too come with big costs, high risks, and poor reputations for working in reservoirs of this nature. [edit: and it would push the producing interval lower in the #7z well. Lower.]
7 - At this point any investment in HUR is as a recovery play, not something more hopeful.
8 - Serious investors in this are not dummies. If Co wish to be treated as something other than an AIM penny stock for gullible retail investors and daytraders then they need to confront and explain the bad stuff, not evade it with a handwave.
9 - There is a risk that HUR will try to defend the indefensible for longer than the evidence can justify it. If they do that, and I think they are verging on that, then that in turn can make individuals' positions untenable.
10 - The last CFO left for a reason. It seems to me pretty obvious what it was, and I don't think he was wrong - I can pretty much guess the conversations that went on.
11 - Retaining the NEDS is a big unwritten risk at this point. NED-only meetings must be quite interesting.
12 - And they still have not told the shareholders any relevant information about the default clauses on the convertibles.
13 - Other than that it was OK I guess.

Overall that was adequate as the warm-up play of a two-part presentation. Now do 90-minutes on the big issue. Including getting grilled ever-so-gently by folk that actually know what they are talking about.

That was not a CMD that will get anyone reaching for the cheque book. It leaves more questions unanswered. In fact I don't think it has answered any questions at all.

regards, dspp

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Re: Hurricane Energy (HUR)

#303587

Postby spasmodicus » April 27th, 2020, 1:12 pm

dspp wrote:hat CMD presentation was about 80-minutes long. Some brief points on it and the accompanying updated slide deck & RNS from my point of view.


thanks dspp, you saved me from having to sit through the whole thing.

If Co wish to be treated as something other than an AIM penny stock for gullible retail investors and daytraders then they need to confront and explain the bad stuff, not evade it with a handwave.


well, the HUR share price today is 10.5p, so on that basis, it's getting into penny stock territory and is also currently my worst performing oily. Even if the oil price recovers somewhat, on present form HUR will struggle to recover with it.

[gullible retail investor] S [/gullible retail investor]

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Re: Hurricane Energy (HUR)

#303597

Postby FabianBjornseth » April 27th, 2020, 1:45 pm

dspp wrote:6 - Talking about running straddles in the heels is a big deal. You won't squeeze straddles of the size required down an ESP bypass on CT. It is a yank the completion job. And getting them to work in fractured reservoirs is generally almost impossible, and comes with quite significant operational risks (i.e. bugger the well up, for good - that is one of the two wells .....). Oh, and high costs. Or if they go other water-shut-off pathways then they too come with big costs, high risks, and poor reputations for working in reservoirs of this nature.


Together with the alternative of an infill producer to make up for the production shortfall, this marks a new point in the communication:

  1. There's not going to be produced water during the EPS
  2. Water has been observed, but it is explained by the reference model and is not a problem
  3. Water rates are beyond the reference model, but it's not a problem
  4. Water rates are beyond the reference model, it may be a problem, but we have ways to address it

I'm afraid that at some point we'll get to:

  • Water rates are far beyond the reference model, it is a problem, they're not going away and are unfortunately unmanageable with the technology and funds available.

Cue downgrades in production forecasts and reserves.

The reservoir pressure trend was finally revealed, and it's dropping far faster than even the low case models previously presented. A ~500 mmbbl connected volume (where the water saturation is unknown, but significant) is far below previous estimates. Mind that in the May 2017 CPR, the 2C ultimate recovery for Lancaster was estimated to 523 mmbbls. The trend so far indicates production below bubble point of ~1600 psi long before the EPS 37 mmbbls are produced. There was no discussion on reasons why and how it would impact the reserves, but they may be related to:

  • Compartmentalization
  • Net-to-Gross Ratio
  • Porosity
  • Fractury Compressibility
  • Fluid Compressibility (more of the reservoir fluid being water than expected)
  • Other factors I can't think of

All of these will differ from the model, no model is ever perfect, but a discussion of which deviations are more plausible and the associated impact would have been welcome.

As the water cut increases, the reservoir offtake in terms of reservoir barrels extracted per day is increasing as well. This would further accelerate depletion, but the offtake is capped by the Aoka Mizu's 35'000 bbl/d liquids constraint. If that is reached, which will happen unless the trend changes, pressure will flatten, but only because the company is no longer able to meet its' production guidance.

With the FBHP now 200 psi below initial reservoir pressure, from an initial drawdown of 70 psi, a longer section of the well should already be contributing. Why is this not the case? How far down in pressure would we have to get to see this effect?

All in all, some of the known reservoir risks appear to be materializing. It would be great if over the next 6 months, pressure stabilizes and the water cut dies down, but I don't know of any field examples where that was achieved without infill drilling.

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Re: Hurricane Energy (HUR)

#303699

Postby Nimrod103 » April 27th, 2020, 9:33 pm

FabianBjornseth wrote:The reservoir pressure trend was finally revealed, and it's dropping far faster than even the low case models previously presented. A ~500 mmbbl connected volume (where the water saturation is unknown, but significant) is far below previous estimates. Mind that in the May 2017 CPR, the 2C ultimate recovery for Lancaster was estimated to 523 mmbbls. The trend so far indicates production below bubble point of ~1600 psi long before the EPS 37 mmbbls are produced. There was no discussion on reasons why and how it would impact the reserves, but they may be related to:

  • Compartmentalization
  • Net-to-Gross Ratio
  • Porosity
  • Fractury Compressibility
  • Fluid Compressibility (more of the reservoir fluid being water than expected)
  • Other factors I can't think of



I commented quite a while ago, on this thread, that the Lancaster Field was over hyped and under appraised. The evidence that something was amiss was plain to see in the two CPRs, which did not address properly the two big uncertainties - where was the OWC?, and how much porosity really was there in the reservoir rock? I am appalled that some big names in G&G and Reservoir Engineering have been promoting this field.

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Re: Hurricane Energy (HUR)

#303702

Postby thehaggistrap » April 27th, 2020, 9:48 pm

dspp wrote: - Less than maybe 10-minutes in total was spent on the watercut issue. Yet the watercut issue is the single biggest matter affecting HUR valuation...


Price of oil ?
If oil was sitting steady at $40 then I have little doubt share price would be 25-35p, or higher ?
Many investors would then be in much better position to make a sensible decision.
However global economic circumstances means we investors are tied in for now.

dspp wrote:9 - There is a risk that HUR will try to defend the indefensible for longer than the evidence can justify it. If they do that, and I think they are verging on that, then that in turn can make individuals' positions untenable.


Actually I think you are being unfair there. Where I believe you are wrong is to assume that water will be a binary issue and they won't be able to cope with it longer-term. When the company issue guidance that production will be 18K per day in 2020 I still trust them. If I didn't then I would sell now (and so should you). We would all prefer the water wasn't there : however the EPS was designed to answer such questions and was never going to be risk free. Many of the questions you ask can only be properly answered with further production data and time.

CMD stands for capital markets day. This was never going to be a technical 'data-room' review of reservoir performance that you demand. Certainly the Lincoln / Warwick drills were disappointing. Some aspects of the EPS (increasing water cut) are a concern, but other aspects remain very promising. The dream of interconnected jumbo fields in Lanc-fax and Linc-Wick seems to be over (for now). With that goes the investors dream of a quick x10 bagger on the share price. However that doesn't mean that Hurricane still don't have plenty to play for : assuming the oil price bounces back and they can keep producing oil then HUR will survive the current economic storm.

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Re: Hurricane Energy (HUR)

#303747

Postby Proselenes » April 28th, 2020, 6:57 am

Latest Arden note (PDF file) in the link below.

https://ufile.io/h9jt820j

Retain their buy rating but target price reduced and still very much into writing about the risk, presumably to cover themselves in case something goes wrong.

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Re: Hurricane Energy (HUR)

#303759

Postby feste » April 28th, 2020, 8:20 am

Hi Pro,

Clicking on your link shows up as 'blocked due to Trojan', FYI.

ATB

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Re: Hurricane Energy (HUR)

#303770

Postby Proselenes » April 28th, 2020, 9:15 am

Its just a file sharing site..........it might be that your antivirus has the site on alert status and thats why.

No trojan or anything there, you are safe to download the PDF file.

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Re: Hurricane Energy (HUR)

#303912

Postby dspp » April 28th, 2020, 4:28 pm

I took closer look at the daily rate data that HUR put in the slide deck

Image

Each time there was a fairly stable flow period I noted the oil and water rates for each well and plotted the data. There are 30 periods I noted.

Image

The top two graphs are all of the flow periods. However the first flow periods include drilling & completion fluid losses to formation being back produced, so the third graph eliminates them for the 7z well by only taking the post cleanup data

However this still includes data from non-flowing periods artificially giving 0,0 origin points, so I did it again with those eliminated

Image

For the #6 well (yes, the dry one) this tends to suggest a clearer rate-dependency signal. For the #7z well (the wet one) this is less apparent, indeed the first glance post-cleanup data suggests the reverse. When one looks at the data point by point I think that there are onset lags that account for that, but I'm not wishing to push the data to fit such a theory as I would have to plot all days and do some data clean-up, and that would be fairly tedious. It is something I would expect the company to be doing for us ..... However there look to be individual first day of production lags (i.e. as one would expect with a cone relaxing and re-establishing) that are skewing things, as well as wellbore contents settling confusions.

However there are also signs that the two wells act as one, so I plotted out the combined version as well

Image

That tends towards a somewhat stronger aggregate rate-dependency signal. That combined with the delayed onset into the #6 well but which is nevertheless now firmly established and climbing, do tend to my mind to suggest some sort of coning mechanism is featuring here.

Whether it is coning from aquifer or coning from perched water is not so obvious, or indeed both. Also coning can occur simultaneously with radial inflow, the two are not mutually exclusive. So there is a complicated set of possibilities here.

But watercut is definitely a strong signal, and it is increasing, and it does to my mind look rate dependent as well as time-dependent.

The company should be doing this work, and briefing us. And if you look at the dates of the data, vs the various announcements (RNS etc) and the wordsmithing that is going on, one raises an eyebrow.

(Fabian, yes, the pressure data does seem to indicate low-end cases does it not. Which is one would expect if a) bad rock, b) higher OWC(s), c) water scattered around as well as all the many other things you said.)

regards, dspp

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Re: Hurricane Energy (HUR)

#303941

Postby dspp » April 28th, 2020, 8:20 pm

dspp wrote:I took closer look at the daily rate data that HUR put in the slide deck

regards, dspp


20:18 - went out for a walk this evening and realised I have made a few mistakes in that quick look at the data below. I need to account for duration of the data intervals, and (ideally) for whether it is pre or post breakthrough. I'll stick a revised version up here when I get time from the day job. I suspect it will make the correlations stronger but until I do it I could be surprised.

regards, dspp

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Re: Hurricane Energy (HUR)

#304173

Postby Howyoudoin » April 29th, 2020, 3:43 pm

In case you have not already seen . . .

Company: Hurricane Energy plc (‘Hurricane’ or ‘the Company’)
Ticker: HUR
ISIN: GB00B580MF54
SEDOL: B580MF5

Annual General Meeting Date: Wednesday, 3 June 2020 at 11.00 am
Proxy Voting Deadline: Monday, 1 June 2020 at 11.00 am

Recommendation of the Board: The Directors consider that the passing of all of the resolutions will enable us to promote the success of the Company for the benefit of all its Shareholders. The Directors will be voting their shareholdings in favour of the resolutions and unanimously recommend that you do so as well, using your proxy vote.

Information Agent: Boudicca Proxy Consultants

COVID-19 Note: Further to UK Government instructions issued on Monday 23 March 2020, the AGM will be convened with the minimum necessary quorum of two shareholders (which will be facilitated by Hurricane). Shareholders must not attend the AGM in person and anyone seeking to attend the meeting will be refused entry. Advisers and other guests have also been asked not to attend.

Your vote is important to Hurricane and your Board of Directors wishes to ensure that your vote is counted at the AGM. In light of the UK Government instructions regarding public health, Shareholders must not attend the AGM in person and anyone seeking to attend the meeting will be refused entry. Instead, all Shareholders should lodge their vote via proxy well in advance of the AGM.

In normal circumstances, the AGM provides an opportunity for your Directors to meet with you, outline our thoughts on the development of the Company and answer your questions. In light of current public health advice to limit travel and public gatherings, the Company will consider hosting an event later in the year for directors to meet with Shareholders and answer any questions they may have.


Dear Hurricane Shareholder,

You should be aware that the 2020 AGM will be held on Wednesday 3 June 2020 at 11.00 a.m. A copy of this document and the Company’s Annual Report and Group Financial Statements for the year ended 31 December 2019 can be viewed on our website at www.hurricaneenergy.com.

Alongside the Annual Report, Hurricane has also published its first standalone Environmental, Social and Governance (ESG) Report.

The Directors consider that the passing of all of the resolutions will enable us to promote the success of the Company for the benefit of all its Shareholders. The Directors will be voting their shareholdings in favour of the resolutions and unanimously recommend that you do so as well, using your proxy vote.

Shareholders are asked to consider and, if thought fit, pass the following:

Ordinary Resolutions
1. To receive the Annual Report and Group Financial Statements of the Company
2. To re-appoint Deloitte LLP as the Company’s auditor
3. To elect Beverley Smith as a director
4. To re-elect Dr David Jenkins as a director
5. To re-elect Neil Platt as a director
6. To allot shares in the Company
Special Resolution
7. Subject to the passing of Ordinary Resolution 6: To allot shares in the Company Disapplication of pre-emption rights

Corporate Governance

The Hurricane Board has evolved considerably in the past 12 months. The Company welcomed two additional independent non-executive directors, both bringing significant oil and gas industry experience.
 Sandy Shaw, appointed to the Board in January 2019, has extensive and highly relevant legal, commercial and transaction experience.

 Beverley Smith, appointed in December 2019, is a chartered geologist with significant technical, strategic and management expertise.
Post year-end, Alistair Stobie resigned as a director and Chief Financial Officer, and has been succeeded by Richard Chaffe as acting Chief Financial Officer.

Hurricane has taken further steps towards meeting best standards of corporate governance, and in this year’s annual report outlines how the Company now satisfies the principal provisions of the UK Corporate Governance Code for Premium Listed companies. This is no longer a bottleneck to moving to the Main Board of the London Stock Exchange, which the Board continues to consider.

Supplementing the annual report this year is a detailed ESG report. Much of what it describes is a reflection of the way Hurricane has operated for years – meeting the highest safety and environmental standards have always been over-riding principles for the Company. The Company is pleased to describe this in more detail, extend reporting on areas of increased societal and investor concern, and to formalise disclosures within the GRI framework. This level of reporting will help to demonstrate the Company’s accountability as the industry aims to reduce negative impacts and support the energy transition.

Assistance

For more information, please refer to the Notice of Annual General Meeting available at: www.hurricaneenergy.com

Boudicca Proxy Consultants are the official Information Agent to Hurricane Energy plc. Should you have any questions, or wish to engage with the Company, please contact Boudicca on +44 (0) 207 099 2075. Alternatively, you may e-mail your enquiries to info@boudiccaproxy.com, or by replying directly to this email. We will follow up this email with a brief telephone call and would appreciate your cooperation with this.

Kind regards,
The Boudicca Team

T: +44 (0) 207 099 2075

E: info@boudiccaproxy.com

6 Lloyds Avenue, London EC3N 3AX

BoudiccaProxy.com

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Re: Hurricane Energy (HUR)

#304581

Postby feste » April 30th, 2020, 6:18 pm

Hi all,

There's a post CMD presentation Q + A now up on https://www.hurricaneenergy.com/investors/presentations that may address some perceived deficiencies/omissions, including some 'colour' re the perched water issue (caveat : as I understood them)

Key points

- water can't be detected just from seismic, it was only identified by chromatography and logging while drilling. It could theoretically have been isolated during the completion phase, had they not done DST + barefoot (DR T acknowledged a 'lack of understanding' of this issue at the time). Isolation can be used in future wells not only to segregate water, but also to bypass less productive fractures and 'cherry-pick' the more productive.

- it would theoretically be possible to isolate retroactively, would need rig + intervention, would cost $ 30-40M + shut-in cost , would need both wells shut in for safety reasons.[Ed.: from other comments re cash constraints/priorities, this seems unlikely at present ].

- re suggestion / Q of draining the perched water by aggressive 'suck' (choke manipulation, not ESPs) , this is 'a possibility under consideration', the problems being (a) there's no way (per Dr T) of estimating possible volume and (b)possible complication of connectivity with 6Z.

- as to data 'showing it's perched water', Dr T said because it was 'resident' at time of drilling and because of 7Z's behaviour after shut-in : high water cut, dropping suddenly as water came from above 7Z (?); also , barely 1/2 deg C of temperature differential, compared with roughly 10 deg C at shallowest OWC .

Lots of other Q +A , most heavily qualified by 'present circumstances', understandably.

HTH and ATB

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Re: Hurricane Energy (HUR)

#305932

Postby frafra » May 5th, 2020, 10:06 pm

While listening to the webcast and Q&A I was stuck by the reference about the connected volumes and I spent some time crosschecking the 2020 cmd presentation and statements in relation with the previous company presentations.

2020 cmd gave indication the the connected volume is about 500 mmbl while in the 2019Q3 presentation connected volume pre-start up was quantified as 250-300 mmbl and assessed to be quantified in post-start up.

2019 presentations indicate potential for a reserve uplift to 2P 100 mmbo in 2020H1.

Is the company indicating us that they see this potential based on connected volumes and EPS results using the median recovery factor indicated in the 2017 CPR?

I'm interested in any comments.

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Re: Hurricane Energy (HUR)

#306077

Postby FabianBjornseth » May 6th, 2020, 12:26 pm

frafra wrote:2020 cmd gave indication the the connected volume is about 500 mmbl while in the 2019Q3 presentation connected volume pre-start up was quantified as 250-300 mmbl and assessed to be quantified in post-start up.

2019 presentations indicate potential for a reserve uplift to 2P 100 mmbo in 2020H1.

Is the company indicating us that they see this potential based on connected volumes and EPS results using the median recovery factor indicated in the 2017 CPR?


Based on the data available, it seems that adjustments are likely to move in the other direction:

  • While the volume the wells see is larger than what they saw immediately after start-up, it is much smaller than even the low-case in-place volumes from the 2017 CPR.
  • Pre-EPS models expected the wells to access the entire in-place volumes, as can be seen from the bottom-hole pressure predictions.
  • Compartmentalization may cause the wells to access a limited part of the reservoir, and could preserve STOIIP estimates. However, this could negatively affect recovery factor, and thus reduce recoverable volumes.
  • On the other hand, if the STOIIP is reduced, this would also reduce estimates for recoverable volumes.
  • Water apparently makes up a significant fraction of these connected volumes, which will further reduce STOIIP.
  • Additionally, the limited water handling capacity of the FPSO currently poses a threat to extending the EPS lifetime

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Re: Hurricane Energy (HUR)

#307724

Postby dspp » May 11th, 2020, 8:02 pm

RNS -
https://ir.q4europe.com/Solutions/Hurri ... d=14693301

Alken sell down from 5.4% to 4.9%.

I think as a Luxembourg incorporated this takes them below the non-UK 5% threshold. So this may be a two-step exit to avoid blushes. If so we ought to see if someone picks them up in one package, or if they get split up to others below the 3% and 5% thresholds.

Clearly they didn't want to hang around to see if the water stopped , in hope of a recovery play.

regards, dspp

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Re: Hurricane Energy (HUR)

#307741

Postby Foritza » May 11th, 2020, 9:04 pm

DSPP, you deem it necessary to comment on a continental SICAV releasing an rns BUT nothing of note regarding the CMD q&a session? I'm disappointed I tell ya, disappointed...

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Re: Hurricane Energy (HUR)

#307759

Postby dspp » May 11th, 2020, 10:42 pm

Foritza wrote:DSPP, you deem it necessary to comment on a continental SICAV releasing an rns BUT nothing of note regarding the CMD q&a session? I'm disappointed I tell ya, disappointed...


Sorry. I'll try to listen to it tomorrow. I have a day job (and a "honeydo" list) and from the gossip there was nothing much new said, apart from perhaps the temperature signature. So I haven't listened yet.

Mind you I am disappointed, but not surprised, that it took HUR 48+ hours to post it up. That is 48-hrs in which there was asymmetric market knowledge ...

.... not that it makes much difference on this occasion. But it isn't good either. But its is normal for AIM. It almost gives Toronto and Vancouver a good name. Remember Bre-X ?

regards, dspp


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