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HUR are in a stunning financial position for a small/medium size O&G company at this stage in their development.

At this precise moment in time (after the first two shipments of oil), HUR have approximately $100M hard cash sitting in their back account.

OPEX (includes all costs: Bare Boat Charter, Ops & Maintenance and G&A)) is only $22 per barrel, set to drop to $20 in 2020.

The cost of HUR's only debt (CBs) is a puny $17.25M p.a ($230M @7.5% coupon).

So, even at $40 oil HUR have no financial worries what so ever.

It's easy to lay criticism at HUR's door but saying they are financially insecure is frankly laughable.

Obviously, this is all dependant on the EPS continuing to perform as it has done so far, but if you don't buy into that then you really need to ask yourself why you are here.

GLA.

Apologies. Took spud date from a spreadsheet on oil activity and took the wrong date. As you quite rightly point out, the 23August hasn’t even happened yet (or not in 2019 anyway).

Eight weeks was rough guidance from HUR at the AGM.

GLA.

Hi daltry,

My theory on HUR moving from AIM to the FTSE250 is that they are quite rightly waiting until FB is fully proven up and they have had some success with the 3 GWA drills lined up for next year (subject to the current drilling campaign).

If this all goes to plan, the SP will be way north of where we are now and it would be a good opportunity to raise a bit of cash to fully fund their share of a GWA FFD.

At that stage, the dilution would be relatively small and the upside of a fully funded FFD would be great.

Just my theory FWIW.

I'm still hugely positive on HUR and I'm sure it will all come out in the wash.

GLA.

daltry,

Make no mistake, if Lincoln comes in we are back in the game. There is enough oil there for a GWA FFD alone as well as the short term benefit from a tie-back to the AM.

The WD drill failure closely followed by Kerogen dumping 25% of their holding has hit the SP very hard. Sentiment is low but with the EPS performing so well, a result at Lincoln should underwrite the whole HUR story once and for all.

If there are no drilling set backs, then I understand that the Lincoln drill is expected to take about 8 weeks in total. It was spudded on the 23rd August, so 8 weeks takes us up until the 6th September. On that basis, we are only about 2-3 weeks away from DST and flare watching time.

GLA.

I think the institutional investors buying in at 46.5p have a slightly longer time frame than a few weeks in which to evaluate the success of their investment.

Not sure what you mean by "lack of trust" either unless it's what you are trying to spread.

Everything was out in the open prior to the Kerogen sale. For example, the WD result was known, and more importantly, the early EPS feedback had just been released at the CMD, only a few days before the sale.

It strikes me that despite the WD failure, the institutions involved thought HUR was well worth a shot at 46.5p.

GLA.

wellwell,

HUR/Spirit only need a great result at Lincoln.

If Warwick Crestal comes in then it is obviously a great result but the partnership has already stated that a 500M barrel FFD of Lincoln is the fallback option and that’s not a bad fallback in anybody’s book.

A good result at Lincoln combined with the ongoing performance of the Lancaster EPS ensures HUR’s long term future.

Warwick Crestal is just the cherry on the cake.

If Lincoln fails to please, then there a lot of questions that need a swift answer from HUR, as they have very much presented it as nailed on tie-back for the AM.

GLA.

The other point to bear in mind is that HUR are the operator on GWA until the decision is made to go for FFD.

HUR will have called the drill order. It's got RT written all over it. WD was probably a better place to set the first pressure gauge or suchlike. Little thought given to the effect on the SP of a negative drill result or they were very confident. Either way, it didn't work out well.

The sensible business decision would have been to start with the safer option (Lincoln).

We might not have taken the hit on Kerogen selling 110M shares if that had been the case (I'm assuming that the Lincoln drill result is positive).

GLA.

ronok,

You are incorrect.

Spirit are committed to drilling ALL of the 3 GWA wells, whatever the results are from each drill.

Whether they commit to the 2020 three well drilling campaign is another matter and depends entirely on how they view the GWA prospect.

GLA.

Just checked with HUR and it's official, there is a lot riding on the Lincoln drill result....

GLA.

ronok,

With respect, I wouldn't worry about too much about Warwick at this moment in time.

It's all about Lincoln.

If Lincoln comes in, then we are back on track.

It doesn't really matter what happens at Warwick thereafter, as long as Lincoln comes in and the EPS continues to perform.

GLA.

Two swift kicks in the nuts out of the blue.....

WD drill unsuccessful whichever way you cut it, followed up by Kerogen dumping 25% of their total shareholding.

Agree with wellwell, in that HUR were very much selling WD as pretty much nailed on, with a quoted 77% COS for Warwick overall and talk of whether to tie-back WD or Lincoln.

Can't really blame Kerogen for derisking a bit after that result. As previously outlined, they have now pretty much covered their initial stake and must be feeling a whole lot happier. Would they have sold if WD had been successful, probably not, but we will never know. However, the upside is that there were plenty of takers for 110M shares at 46.5p so somebody likes the opportunity at that price.

I think in all the disappointment of WD, the performance of the Lancaster EPS has been somewhat overlooked. Providing that keeps performing as it has done so far, any investment in HUR at this level is going to be a profitable one, no matter what happens with the GWA.

Maybe some of that was down to the disappointment in RT's ability to sell HUR. I agree with most on here in that the facts were phenomenal but the presentation was dire. Stobie wasn't much better either. I don't want to reopen this can of worms, as it's been done to death on here. In the real world it's very rare you get a great geologist with great sales skills and I do think RT and Co have done a great job to get us this far.

If Lincoln comes in then we are very much back on track and WD will be forgotten. There is plenty of oil at Lincoln for a FFD and Spirit and HUR have already said that is what they will do if Warwick doesn't work out. Yes, I know Spirit is up for sale but I can't help feeling that anybody who buys Spirit has a beady eye on the GWA. In truth, nobody is going to make a move on that front until the GWA drilling campaign is over.

So not all doom and gloom, just the first proper set back this far but a result at Lincoln will kick that into the loose grass.

If Lincoln doesn't come in then it's a long, cold wait for the EPS to prove itself.....

GLA.

aduk,

The reason there are two wells is so that HUR can more accurate understand the way the wells interact and the reservoir characteristics. It is not a case of 1x2km well = 2x1km wells as you seem to suggest.

I think originally there were not enough funds envisaged for 2 separate wells, so a longer 2km well was the cost effective solution at the time of planning. The funding from Kerogen enabled the two well EPS solution

GLA.

AS stating that "the big boys were waiting for us to fail" dates back to 2017 when HR were trying to secure a FO deal or some external finance. I was there at the AGM when he explained this to a group of about 5 of us.

Against the odds, HUR secured a $530M fund raise.

Thankfully we are now well past this point, with positive cash flow from the Lancaster EPS in place, HUR can organically develop GLA, with or without an oil major.

Whatever happens with GWA, HUR have a significant business in GLA as a stand alone unit.

GLA.

"Importantly, we have evidence that suggests to Hurricane that the result at Warwick Deep does not have negative read-across to Lancaster or Lincoln."

From the CMD Operational Update RNS. I think that clarifies that point for both Lancaster and Lincoln.

http://ir.q4europe.com/Solutions/Hurricane2018tf/3942/newsArticle.aspx?storyid=14375793

The 3 well drilling GWA campaign in 2020 was never "nailed on".

It was, and always has been, subject to the results from the current 3 well drilling campaign.

I also think that anybody that thinks BP, or the like, will buy Spirit so they can just sit on the GWA acreage, tie up a huge amount of working capital and do nothing, is verging on a conspiracy theorist.

Good luck to you if that's what you want to believe.

It won't stop HUR for one moment. They will just go ahead with GLA and the rest can be damned.

As an aside, Spirit have signed a FO deal with HUR and anybody buying Centrica's share of Spirit are legally tied into that deal.

Spirit are much, much more than GWA anyway.

GLA.

daltry,

Anybody that buys Spirit will be shelling out a fair old sum and subject to the right results from the remaining two GWA drills, will be seeking to capitalise on that investment. You seem to suggest they will sit on GWA and do nothing with it. Good luck with that theory. If that's your theory, it doesn't do much to stop HUR developing GLA. Maybe you should lay out your thoughts in detail and we can understand better your theory.

Not sure what you're peddling this time (last time it was most certainly old news, as shown by the same article having gone to print back in February of this year)) but sounds like a dose of "confused" to me.

casapinos, CBs do not get you on the list of significant share holders until they are converted to shares and at that stage an RNS will be issued to advise on an increase of shares in issue. No CBs have been converted as yet. Alken may well also own HUR CBs but that's another matter.

GLA.

casapinos,

Apologies, the irony of the MM remark was lost on me.

The "indirect voting rights" are down to the way the various Alken affiliated companies are holding the shares.

See DTR 5.1 and DTR 5.2.1 for more information.

FWIW I also checked with HUR that this had absolutely nothing to do with CBs.

GLA.

casapinos,

I don't think there is mystery to be had here.

As a direct result of Morgan Stanley's book building activities, 110M shares were offered at 46.5p and they have gone to a number of different buyers, non of whom have built up a holding greater than 3% or 5% (depending on where the holder is based/fund structured).

That explains why there have been no TR-1s.

To even remotely suggest a MM would buy 110M shares to drip feed into the market is frankly ludicrous.

AFFM S.A.'s 5.37% holding has nothing to do with CBs either and was taken out prior to the 100M Kerogen share sale.

GLA.

daltry,

You are just peddling very old news. This story and the potential sale of Spirit by Centrica has been floating around for months.

If it helps your case, I think there is scope for the SP to drop back a little bit further before the Lincoln drill results are known but not because of this old news. On the other hand, it might go up a bit if 45p is the base.

Neither you or I know.

The key point is this does not effect the GWA FO arrangement anyway.

GLA.

daltry,

Read the article. Old news. Centrica have been in trouble for years.

The facts of the matter are that Centrica own 69% of Spirit (Bayerngas Norge AS own the remaining 31%) and it's a completely autonomous business. Autonomous being the key word.

The funds for the GWA FO have been committed by Spirit and this will not stop the drilling campaign. Spirit are legally obliged to fund the drilling and other aspects of the FO arrangement and it has the funds in place to do this.

If Centrica sell their share of Spirit, then nothing is going to happen before the results of the Lincoln drill are known (next 6 weeks or so) and if successful, I think there will be a lot of interest in buying their share if it is indeed put up for sale.

I don't know why you seek to link the Kerogen sale to this "old news" other than it suits your agenda. In all likelihood, Kerogen sold because of failure at WD.

Kerogen need to manage risk just like everybody else.

Keeping the figures simple, having bought 428M shares at 15p for £64.2M, selling 110M at 46.5p releases £51.2M which almost gives them a free ride going forward.

With the WD failure just weeks ago and the drill bit rotating at Lincoln with no absolute guarantee of a success, It's a sensible move.

I took the liberty to change the subject title of your post, as I don't think you really believe that do you ?

GLA.