Member Info for GD1962

There was a news story this morning on Energyvoice “Hurricane energy weighs up $250m boost to Lancaster with new well” but now vanished!!

this price is furstrating too so dusted off calculator to try make sense of it.

ssume net cash after Jul repayment and lifting of $90m (company RNS 16 June)

If we were have worse-case-windup scenario that Bluewater terminate AM charter now giving 6 months notice, so say we have just production to December.

Company guidance on production is arate of 7,500-8,500 for rest of the year.Take Lower end of that 7,500 bopd x 5 months = 1.13 million bblss.

assume $110/bbl Brent less $3 discount (Company year end presentation) less Bluewater's 8% cut, less $35/bbl cost per barrel (Company year end presentation) thats about $63/bbl free cash produced per barrel = $71m net increase to cash between july and December.

Take off say $15m for the widnfall tax, less say $10m G&A, add back $18m that would be released back to Bluewater on terminating the lease thats totals around $155 million cash in a windup scenario (i assume that the decom is all fully funded which it looks to be).

$155m over 1.992bn shares = 7.8 cents/share or 6.4 p/share which is where we are today!

so unless my calculations are very wrong ,market is not valueing anything beyond cash in a wind-up situation. must be something else out there driving it down? ?possible that Spirit are trying to extract a substantial settlement after paying for those three wells on the Warwick-lincoln only to see the licences given up? ?esps about to snuff it? ?production rates about to go down under guidance so testing the 7z to see what helps?

GD

Asimple- these just points I found of interest when reading the Report and just sharing them with this Group.

The comment around co2 ; I believe the avergae is in region of 20kg per barrel. Of interest as the players making. deals and acquisitions at the moment (likes of Neo, Kistos etc) are focused on low co2 so HUr’s relatively high co2 may make us unattractive.

Having had some time now to digest the annual Report here are my thoughts- most of it already published in the results RNS but some things of interest-
;;why are the CA directors hiding away and no photos of them?
;;explicitly stating that they are looking to acquire third party assets
;;flagging a windfall tax as a risk
;;there was a FCA enquiry last year because of the restructuring and other previous issues (the reserves downgrade maybe). but no action was taken
;;voting off the auditors at 2021 Agm “last minute could have had bigger negative effects
;;CFO and CEO are getting an extra 33% on top of their salary (338 and 281k for 2022) as “retention” - to incentivise them to stay?
;;and a bonus of 11%
;;actually looks like this retention scheme is for all employees so must be worried about people jumping ship
;;just about halved headcount compared to last year
;;cfo/CEO still have hardly any shares and none bought in year
;;the co2 per barrel is way above n sea average.

I will pass thoughts on the financials but another time as there. Is only so much I can cope with reading these things in one go!!
Regards
GD

Yes but that’s profit at a much higher price than assumed in the CPR. CPR rules has to take forecasts as they stood at 31 dec 2021 hence the low price deck and NPV.

Put it another way even if you assumed $100 oil how would you get NPV of $700m off 5.8 ‘million barrels? When that would get you $580m rev?

No the 10 means is discounted at rate of 10%

Take 5.8 million barrels x say $72 per barrel average based on ERCE. price deck for revenue of $417m
Less Bluewater cut 8% of $33m
Less opex of say $8m a month based on last accounts up until apr 24 per Erce report = $224
Less Decom costs $50m

That makes $110m. Discount at 10% would get that lower. So $70.8m not miles off according to me fag packet calc

From Hur website “ Hurricane Energy PLC has submitted, for the consideration of the Secretary of State for Business, Energy and Industrial Strategy, a draft Decommissioning Programme for the Lancaster Field Floating Production, Storage and Offloading Vessel in accordance with the provisions of the Petroleum Act 1998. ” thatdocument does say an estimated cessation of q2 2023 but I guess that is just an estimate and some date has to go in.

In in the Public Notices Section ; not in online edition. And on Hur website apparently!

The Oil Price assumption would be determined by ERCe not the Board and set at whatever the forecast was looking like at 31 December. The Production guidance and cessation of Production timeline are actually very close to the Restructuring plan figures and time so not much has changed. Speaking of Cessation of Production they have now started consulting on decommissioning plans (in. Shetland Times)

Once that contract was signed sealed etc they cannot just sit on market sensitive news;; it’s a”release RNS without delay” instruction from NoMad.

Also I am not sure why there is expectation of bond repayment soon;; that gets repaid in July and not earlier

Sorry that should have meant "unlike a lot of other oilies on AIM"!

"Where us all this money coming from and why" unlike otherOilies HUR actually sells the black stuff and gets paid for it!!

"Sorry to sound naive but what is that BP are doing? I don't understand." As I read it it gives HUR some working capital help so rather than having to wait 2 months between uplifts and cash coming in(gap will get longer as production keeps going down don't forget) so HUR can draw down funds in advance based on Oil produced but not yet uplifted.

The share price isn’t high enough to trigger that “clean up’.Original equivalent was $200k so share price will need to be 50% ish higher than what it was around 2017.
Regards
GD

“ Imo the company could stop producing oil today and the value of this alone would cover a very significant amount of the 5p per share”

Careful on that. ; my tax is a bit rusty but believe that once you “cease trading” the tax losses are blocked and can’t be used. So you have to sell up as a going trading concern and even then there are rules about changing Or reviving activities of a company following takeovers which can block tax credits.
Regards
GD

CBS ,
50 or so days is around right. The cargos were certainly approximately every month initially but at current production rates they will come less often as rates go down. As it would become less cost effective to pay fora tanker that is only half full!

“The 25th cargo of Lancaster oil, totalling approximately 530 Mbbls, was lifted on 9 October 2021.

As of 30 September 2021, the Company had net free cash† of $73 million. The main movements over the three-month period from 30 June 2021 were:
· Revenue of c.$33m from one lifting of Lancaster crude in the quarter
· Operating costs and G&A of c.$30 million (including share of costs relating to the Lincoln-14 well plug and abandonment activity)
· Repurchase of Convertible Bonds of c.$62 million (including accrued interest) and quarterly cash coupon payments of c.$4 million
· Net cash capital expenditure of c.$3 million
· Net movements out of restricted cash of c.$6 million
· Decrease in net working capital of c.$1 million”

That 9800 forecast asssumed annual average of 90% efficeincy or uptime. So the impact of the maintenance shut down in July is spread over the year, if that makes sense. Without knowing what actual efficient was in august you can’t really say how far above gross predictied it was, but looks more or less in line with what was forecast.