Member Info for 0161

Not going to lie..
Came on here and read that title and just had to laugh.
You two really don't get on do you, but the question is which one of you is the blame ????
Hahah joking don't be starting that up.

On a HUR related note, Biden is buying all the oil back in Q3! Going to put some serious pressure on the price, hopefully HUR hasn't been subject to a takeover by then.

It's going to be the first 5 days of May that count (unless the last 5 days are cheaper for BP)

So I suspect we are looking at around $108 ish

Still not bad, works out at around $55m for May.

I don't disagree lynd.

However even by doing nothing to increase production, it's looking like by July there will be over 4p of cash per share.

By end of December over 9p

Plus we already have 8 to 16p per share in tax credit value.

Hopefully they will be more adventurous and not a one tricky pony, but even if they are; it looks like 20p+ per share is likely in 2022.

Even in one trick pony mode, 9.5p and no movement as oil prices rise up seems oddly subdued.
I agree it could be PI's feeling the pinch contributing here to a low price.

As Malcy has put on his blog at a SP of 9.45p this appears to be a no-brainer.

They timed this well for our thread

https://www.bbc.com/news/live/world-europe-61295448

I think we will see a deal of some form done with Hungary.

My prediction is $161
Germany / EU have been fairly consistent about the end of the year to cut oil from Russia which is hard but possible. Gas they know is much harder and can't be as quick as oil to replace.

My thoughts are they are very close to restricting russian oil, but come the end of the year they plan to ban (maybe an exception for Hungry or some support)
By Oct/Nov I think the demand and supply squeeze will be so tight I think it will pop over 150.

Sooner or later a ban on Russian oil is coming

https://oilprice.com/Latest-Energy-News/World-News/EU-Prepares-New-Imminent-Sanctions-Against-Russia.html

I would assume that very soon we will see phase 1 of the ban/reduced usage.

Obviously it's going to put upwards pressure on oil prices. What's everyone's prediction for the peak oil price this year ?

I hope you have come here with a belated birthday card for yesterday.

No? Oh that's right I wasn't born yesterday.
Let's keep it on track, resist the urge, and stay away from each other (no baiting)
Let's make some money bro and leave the handbags for the ladies.

Come on you two I think everyone has grabbed the pair of you and banged your heads together by now!

Time to cut it out! It's not 2am and we are not outside spoons watching you two scrap between bin dipping.

I think most oil companies would be interested unless their own tax credits from covid losses are not going to be used for many years.
However with oil prices now the complete opposite of where they were in covid the tax credits will be used very fast.

Just looking at BP for example they made a tax loss of $20b.
BP now have announced profits of $12.5b
That now leaves $7.5b of tax credits.

I suspect they wouldn't be disinterested in topping up their remianing $7.5 by another $1.6b.

Hopefully HUR won't be bought and can use the tax credits itself which would mean 16.8p goes to each share via profits from the tax saved.
But any oil company buying HUR would need to be assigning an asset value of around 8p a share to the asset value of the tax credits.
Not many companies wouldn't buy another company as they didn't want to save hundreds of millions in tax.
Companies that don't make anough profit to worry about tax are unlikely to be acquiring other companies.

Fandg2 - in the HUR PDF report they released alongside the RNS, it appears HUR have valued the tax credit value to the company at $410m.
https://www.hurricaneenergy.com/download_file/force/691/222
It shows a bar graph and says the tax credits add up to about $1.6b
Then they value this at $410m.

Obviously we have been guessing they are worth £100m +
But I for one was not adding them up to be $1.6B

So Malcy is saying the value of the 1.6b has a value of $410m to the share price, i.e 16.8p

I had been working on that value being 5p per share.

What I would say is that if the company was sold rather than using the tax credits itself then the value would be half, so $205m or 8p per share.

Eitherway the current SP of 9.5p has a lot of value built in to it.

The below is from the article that Fandg2 posted.
Looks like the article is leaning towards a SP value of 25p by the end of the year, even without considering a good forward plan.

"SP of 9.45p laughable !"
"Wise investors call this a no-brainer"

"As expected Hurricane is now an extremely efficient machine, something perfectly visible for some time. There is now significant upside after production beating guidance, revenue of $240m and substantial free cash flow and hardly any debt. Put the cash per share of around 4p this quarter, growing to, say 8p by the year end and this makes the current price of 9.45p quite laughable. 

Other key “new news” is the company putting a figure on the value of the tax losses- $410m- that’s 16.8p a share not to be sneezed at and 85% achievable by the looks of it. Total that all up and take a look at the margins on very creditable realisations and wise investors might just call this a no-brainer. "

The SP will sort itself out soon enough, the net free cash in the bank is chasing after the share price now.

Each uplift is generating oil sales equivalent to 3p a share.
Not all profit but the vast majority is at these oil prices.
Also to add on to that is 5p a share for the value of the tax credits.
Net free cash in the bank after paying off the bonds on the last financial update was also worth about 1.5p a share.

The money is stacking up against a low share price. Strange that the SP is low this week, but hopefully some of us have been able to make the most of that.

If oil prices are favourable, next week we should be setting a good price for getting around another $60m for May's uplift.

HUR 2022 25p+

Happy to see the oil price going up.
Either next week's average oil price will be used by BP to price the next uplift, or the last week of May.

Would be a nice boost to get another $60m for Mays uplift.

Some turnaround that...

Year ending
December 2020 625 million loss
December 2021 18 million profit

Nearly a $650 million swing in profits within 12 months.

The strict rules as pointed out in the HMRC article that you posted are to stop say a car manufacturer buying caravan dealships for their tax loss.

I think an oil company would quite easily be able to conform to the rules, these deals do happen fairly often and I see absolutely no reason why HUR would be an exception.

Absolutely agree, good article by HMRC.

The buying company has to be smart as HMRC are always waiting to pounce where they can. This is why the tax credits typically carry a 50% discount and also the buying company would normally spend several million on specialist accountancy fees.

If the loss was only £5m then it would probably be too small to be worthwhile, however HUR has over £1 billion so it's very worthwhile.

A purchasing company either buying HUR to tap in to its current licenses or use HUR to extract oil on one of its own licenses in the North sea would be very capable of using the full value of the tax credits.
A specialist accountant probably could be more adventurous but there is probably no need as either of these options would be very lucrative for a buyer.

Hopefully HUR doesn't sell and is able to use the tax credits in full itself, but it is indeed a value which would not be ignored if HUR was sold.

Tax losses can be transferred in an acquisition, and do add significant value.

The purchasing company would need to be an oil company, so British airways couldn't buy HUR for the tax loss. But so long as the business continued to do something similar eg pump oil out of the North sea then it is very reasonable that a company purchasing HUR would benefit from £200m to £300m in tax savings. It's very reasonable to assume companies would pay £100m for this benefit.

I believe CA have also highlighted the asset value of the tax credits.

If anyone is confused how this works see the below.
https://library.croneri.co.uk/cch_uk/cpi/12-5

Don't forget the tax credit value.

It's alright saying the share price is double the net free cash (not often you see the share price being supported by so much cash)
But we also can't ignore that around £100m is a very reasonable asset value for the tax credits.
Obviously in the case of an absolute disaster which is what a short bet is hanging on here, the company would now have plenty of cash to keep the lights while organising the sale.
Given gov policy change, and how it's the license region has never been more important, I find it very unlikely that a buyer at £100m would not be found quickly.

I'm not saying it wouldn't be a rubbish time to be invested but add around £100m for a sale in the most doom and gloom scenario and share holders buying now at a £200m mcap look a lot more secure than most other stocks on aim.

Another thing to consider is this "disaster" has to happen quickly as we are months away from the cash alone exceeding the market cap, at that point the tax credits are a nice £100m bonus, they are also worth a lot more to shareholders if HUR isn't taken over.

Another thing to consider is that a failure most probably could be fixed.
Or well P7 could be used.
Finally the CPR didn't support the oil not being there.

HUR has had a hard time over covid and the plot - as I have said before people don't tend to try and take things that are not valuable.
But with where we find ourselves today you can put the rose tinted glasses away bro.
A balanced view is no investment comes without any risk, who knows the well might fail but equally it could surprise and pump over a billion pounds of oil over the coming years (tax free).
The facts as they stand today are the cash in the bank is going to overtake the current mcap this year.
That's a very attractive position imo.

Might take a knock from hyperthetical "bad news"
Probably would be a great buying opp that, as it wouldn't change the £100m+ value of the tax credits or the £40m that is about to be sat in the bank as free cash.

Other hypertheticals are:

20p+ takeover bid (musk if twitter doesn't work out haha)

Better production levels and well life resulting in £500m free cash in the bank. Mcap is only 210m right now. What's that about 25p a share.

The most likely and imminent: forward looking plan. There is currently little to no value in the SP right now attributed to future plans. SP is practically sat on the asset value only.

Discovery of a large additional resource.

Additional or extended life profits from p7 well.

Yep on the downside a Russian sub could take out p6.
Or there could be a technical failure which gives us some downtime and we have to pay to fix it.

Don't know about you but the upside hypertheticals outweigh things for me. Especially as you only have a limited amount of time (months) for the bad things to happen before the cash in the bank exceeds the current SP anyway.

When HUR had huge debts, a plot to take the company away from shareholders and oil was worth next to nothing then fair enough it was a worry. Where we find ourselves now is very different.

As for oil price: inflation is about 8%, do you really see anytime soon that OPEC are going let prices fall 20% or 30% especially for a sustained period of time?

Obviously everyone has their own opinions on each company and how they see the market. Wouldn't be much fun if we all just bought the same stock.
For me HUR is probably a safer investment than it has ever been at anytime in it's history. The asset value is just too strong, and cash is coming in fast.

What we know so far is that it's likely/expected from the CPR that the cash in the bank is going to exceed the mcap, fairly soon.

$150+ oil would be a huge upside.
$80 oil is what has been factored in.

So buying today means you are getting a fully funded oil exploration company, which is already producing and has no debt.
Because of the current share price V bank balance plus profits over the next 9 months, you are effectively getting this company for free. That's to say each £1 you put in, the company will soon have the same amount in the bank which belongs to you via the share.
Crazy that imagine an angel investor getting a deal like that.

On the plus side it might end up with double today's mcap in the bank even if it didnt bother to do any exploration, or even open the other production well it has.

It still looks very decent value to me.

Also a huge takeover target as it has £1b tax credits, or it can make £1b profit itself and pay no tax.

Show me another company with this much value per share.

If it wasn't for the plot which resulted in the company being grossly undervalued, it's very hard to see how the current shareprice wouldn't now be sitting firmly above 40p.