Member Info for GloucesterR

I believe this to be a delayed and standard notification following EGM. Others have mentioned similar broker notifications. I wouldn,t place too much weight on it as it has now been supersceded by CA's postponement of requisitioning meeting and a truce until 6th February with the hope that the FSP will be fruitful.

Sense, I am slightly in front of you. At $95 I calculate circa $148m-$150m Cash which equates to 6.5p and then assuming simlar offload (circa 525k) $180m and 7.8p at end of April, But my gut (and my head) tells me that we will be under offer by then. The tax credits are just too valuable and with other Oilers making hay the golden ticket of circa $250m (my calc on conservative eligible allowances) to offset against tax liability will just be too much to miss.

Spent morning watching Bloomberg. Concensus that POO will hit circa $95 by the end of the month. Potential for $100 + towards end of 1st qtr. China is the key as belief that Covid has moved out of cities into countryside and air travel etc... back in play. Makes HUR more valuable and greater cash and confidence from potential bidders.

Most comentators on Bloomberg now acknowledging that POO moving to $90 plus over coming weeks. A really positive backdrop to negotiations and bid assesments.

With China opening up it looks likely that POO will base around $90 for most of 2023 with forward looking pricing nearer $100 towards the end of 1st qtr. HUR should, with a fair wind have circa $145 -$150m with next offload early February which will focus minds as to level of offers. My gut tells me circa 12p with the level of interest as multiple interested parties to me signals that it is the tax allowances that are in play.

What I find interesting is that CA/Albion have not put forward any justification of believing that Lancaster holds sufficient data to justify a proposal for raising $300m to fund exploration. HUR, as we know is vulnerable due to only having P6 producing and the time limitation of the reducing productivity. Either finance and or farm in but I would have thought some general comment or evidence to support their belief would have been forthcoming. It would certainly also shine a light on the FSP negotiations as currently when we talk about possible sale price there really isn,t any value attributed to Lancaster ( apart from possibly p8)

So the revised deadline for Requisition meeting to 6th February I feel indicates that CA, via their appointed NED, believe that any conditions linked to bids can be sorted in the next couple of weeks or so. Good to keep pressure up, but as I have said before it indicates to me that CA believe that there are credible bids at an acceptable level, otherwise continue with plan B

This for me is really positive news at it indicates the strength of the bids. Early Feb gives a short 3 week window for the various conditions to be examined by the BOD to see if they can be met or mitigated. But very positive and allows Stieffel to conduct negotiations in a peaceful (less hostile!) enviroment. CA with a seat on the board will be well aware of the various bids and will be "inside", not able to act on the info in terms of their shareholding.

My understanding is that an RNS re EGM timetable should come out today as deadline. I wasexpecting one first thing this morning. Hopefully the delay is good news in that CA and HUR management have reached a pause with feedback from Steiffel. I am sure any "credible" purchaser would want an end to hostilities whilst negotiation and conditions are satisfied.

This aspect I think the market has taken too lightly. We do not know the level of these offers but can assume higher than the 7.7p rejected and to recieve BOD attention inorder to be able to recommend will be substantially above 7.7p , otherwise plan B goes into gear. The fact also seemingly ignored is that there are multiple bids not just "expressions of interest" , This will naturally create something of a competitive enviroment. It will be interesting how the EGM notice will be treated today and if CA with board representation, decide to hold fire for a grace period if they believe any of the offers have "traction".

I hope that EGM will be postponed to allow the FSP to continue un fettered. It will show confidence from CA. Stieffel have an excellent reputation and the fact that multiple potential bids are in the pipeline confirm that HUR is a valuable asset. I would be concerned if there was only one or two interested parties but Multiple to me is greater than several and trying not to be too pedantic suggests that competition could be positive. I suspect it will boil down to how much someone wants to pay for the tax credits!

I think re Tax credits , it is a fairly standard procedure for a purchasing entity to benefit from historical tax losses as long as the broad criteria of UK generated taxable profits. It will be more of the scope of the allowances rather than the principle. I suspect in the end, knowing HMRC, the purchaser will take a view as to scope and value of taxable offsets as they will re future production etc...

Whitehat, hope you don,t mind me clarifying. The $350m tax credit is indeed maximum but it is 100% set against tax due on UKt axable activities. This is regardless of tax rate. So in my simple terms if Harbour energy for example was the preferred bidder and had tax liability (non EPL) of circa $300m for the coming trading year they can offset the whole tax credit. The key is how much of the tax credit is eligible.? My assumption is to knock off $100m as unallowable giving $250m and the value to HUR I have equated at circa $100m or around 35% to 40% or 3p to 4p. I hope that makes sense, so very valuable and hence I suspect the key aspect of D/D and clarification.

Carping, Yes used to be my bread and butter many moons ago, but there is a significant difference between a small private company sale and a larger PLC. I see the point but it is apples and oranges. !

I think HUR wanted a pre application confirmation before submission and decision to go ahead with drilling. This mixed response from regulator didn,t "give comfort", But that is I suspect due to HUR's extreme risk aversion, due to BOD history and CA's position. Another producer may take a completly different view. Hence as I say some credibility to CA/ Albion, unless they have actually lost the plot!

Albie, I think P8 risk etc... is balanced because of HUR's position with CA wanting to exit and a mistrust with management. Another Player would I am sure look at P8 with a very different risk parameter and look at mitigation. Having said that in my 12p value I haven,t really attributed anything to P8 or the Lancaster field. . Which, without sounding like a stuck record, makes me wonder how CA/Albion believe that commercial lenders would be happy to stump up $300m to drill it?!!!!

I,m not sure that is the case. I think Maris, being an accountant and with very little sparkle will always err on the side of caution. Stiffel will be handling the behind the scenes negotiation and that will be the hard work and what they are experienced in doing.. HUR's executive team will have an imput at the decision level. The key is that HUR isn,t going out with the begging bowl and have a plan B regardless of CA/Albion ( which I am really sceptical about as you know). So I suspect the D/D etc... is based upon a percieved base line acceptable offer price fro HUR management. My personal view is that is circa 12p. Strengthend again by todays results.

144k. ( also anticipated cash balance with current production and Feb offload circa $145m to $150m, April offload could be circa $175m if POO starts to move in line with expectations.

Initial takeaway. reassuring higher cash balance than projected at $122m. ( due primarily to higher offload with weather delay at %44k). Production date reassuring and in line with expectations. Re FSP it is as we assumed no news is good news in that multiple interested parties. D/D and clarification required which I expect relates predominantly to the tax credits/allowances. HUR is a pretty tidy ship now with no apparent skeletons, decommissioning ring fenced and single
well. The decision will be on value, the offer price and how much that is discounted by the unknowns and risks , p6 and the tax credits. The fact that there are multiple parties is a real positive as competition like anything in life is good. Time constraints with CA/Albion move and EGM , but I would put my money on an offer or series of offers over the next couple of weeks.

Its funny, family dynamics! dad and I agree for once!. Maybe a bit of Prince Harry counselling!!!