Member Info for GloucesterR

Upon reflection, and I really take on board the concerns of LTH (of which I am not), as to Management history and disrespect of Pi's ( to put it mildly). But I would be really surprised if there are no bids being considered. The FSP conducted by Stiffel is a different animal to other developments and due to the timetable and counter pressure of Plan B etc... I think that a formal RNS would have come out saying that there were no bids or no acceptable bids and hence the vote on Wednesday is unfettered. Thats my take anyway.

Even with Management's failure to inform I would have expected an RNS if there had been no bids submitted by Saturday's deadline. This would have been fairly automatic and then left the room clear for the Capital distribution vote etc... and plan B. So I am taking the reasonable approach that there has been a bid or series of bids which are being negotiated or considered by the Board together with advisers. Time is tight and for any bid to be recommended a board vote would be required including NEDs.

As no RNS (yet). I hope that would indicate that there were actual bids submitted by Saturday otherwise there would have been a straightforward early doors RNS confirming such. So it appears a bid or bids have been recieved and it is a matter now of negotiation/clarifying?

I agree sealed bids, Unless I too am missing something Saturday seems a strange day for a deadline unless it is to allow the weekend to expedite negotiations. I haven,t read anywhere that the Bids are "Full and final" and cannot be revised? Re fandg2 really good point re Tax losses. My understanding is that the gross allowances/losses equate to a current maximum value of circa $330/340m. HUR emphasises that the figures are "maximum and some may not be allowable. I think reasonably a 70% discount allowing for some disallowment and natural profit taking gives a credible value to HUR of circa 3p to 4p. CA I believe originally thought circa 6p. Either way, as a % of HUR's current value it represents a significant proportion. Plus the ability for a purchaser to gain benefit almost immediately from the tax losses.

My take. We know that unsolicited bid came in at 7.7p which management rejected. Since then 1 further offload to mitigate risk. The 7.7p bid was blind. We don,t know who from and whether the bidder was a UK focused producer that could benefit from the tax credits? Since then the FSP has allowed for the books and data room to be opened. Any potential purchaser will know that Management will recommend bid to placate CA at the right price. Which is suspect for CA will be 10p +. The advantage that HUR has is that it has an alternative route and one that 6 months ago most of us would have wished for, a policy of capital distribution. So any purchaser will be aware that HUR is not against the wall with a debt deadline imminent. The question for me is how much the tax credits are worth? It is an accounting exercise. $340m maximum avaliable. Say discount of 70% equals $100m , easy round number, which equates to 4p. Any purchaser will also know that if P6 stops pumping the tax credits are lost so they cannot afford to wait to mitigate cash risk. P8 and Lancaster are icing on the cake , ( hence quandry over CA and Albion deal). For me its all about Cash, P6 and tax credits!

Sense, Sorry for confusion. What I mean is that I believe a bid will come in tomorrow, but if it isn,t acceptable to the BOD ( ie too low), then logically the CA/Albion deal is dead too as the absence of an attractive bid, ie 12p plus would indicate that the "multiple" potential purchsers, having complete unfettered access to the data room and technical expertiese will have concluded that Lancaster does not provide an attractive porposition (on top of cash, P6, Taxcredits etc...) such that no lender would see a commercial argument for lending circa $300m to HUR to explore the Lancaster acerage. So Plan B , without an acceptable bid would be reverting back to capital reduction over the next 18 months with POO hopefully at $100 plus post 1st qtr 2023. I hope this makes sense! (excuse the pun!)

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I think if we don,t get an acceptable bid/s tomorrow then the CA/Albion proposal is dead in the water. No reputable series of lenders will provide £250m ($300m) financing for Lancaster field exploration, which amounts to circa 12p per share if a series of other Oilers have looked at the date with absolutely transparent access and determined that HUR with its cash, p6 and tax credits isnt worth a reasonable bid . So for me it is either a management acceptable bid tomorrow or back to the capital distribution route. regarding POO , once China starts to really open up in the 2nd and 3rd qtr POO will have a floor of circa $100 for the next 12 months or so. HUR will be back to making significant cash and by June 2024 HUR should be sitting on $300m plus distributable, maybe more. The risk is P6 but that has always been there!

Dickbat, I agree volumes low, but sadly HUR has a toxic reputation and so many PI's have had their fingers burnt. I feel confident HUR will attract bids as it is an Open sale with Management support, so no infighting and guesstimates. Everything will be transparent to a suitor. The question I suppose is at what price. We know the floor but how high above that floor. You know my reasoning. Many companies awash with cash and significant tax liabilities. it might be an all cash offer or cash and paper which , with HUR's significant cash cushion would be very attractive to a suitor too.

Thankyou for feedback. I think that 12p is reasonable with all the risks attached. The longevity of p6 with its risks may work in HUR's favour as it is wrapped up in a very tidy proposition. It is basically "off the shelf", no licencing applications, no delays simply pick up and go. Yes on paper HUR's assets may be worth much more hence the Albion/CA proposal ( which I still find hard to understand as whom in their right mind would lend $300m to HUR?!!). But 12p to me reflects the risk and also almost represents the value of the tax credits which a purxhaser can utilise immediately against their other UK producing assets.

So 48 hours for any bids to come in. Questions.... Hur has rejected 7.7p which equates to circa $180m. Cash in the bank and 50% of next offload as at the weekend would equate to circa $130m. Tangible assets are P6 at circa 8k bopd. Lancaster field and potential of submitting P8 licence. Tax credits circa $350m ( assuming actual $250m). What would it be worth to a UK focused purchaser? The risk is p6 has mechanical failure. ( cost for replacement pump and delay circa $30m). So discounted risk premium , risk premium on $250m Nav for P8 with concerns over expolration risk and if succesful flaring consent. The pros, are... very tidy, pick up and go. already in production and simple change of ownership. Huge amount of open data, both hard data and from a willing management to sell. Short period to cover costs of purchase as production really only 18 to 24 months. Tax credits definable, potential suitors will have had access for tax departments/specialists to quantify actual margins of credits. so my margin of error is down to $250m or 10p. Lancaster and p8 potential, data room and engagement with management and technicians will allow larger players to make valued judegement as to COS and then regulator concerns over flaring. Larger Lancaster potential, either Albion and CA have lost the plot or there is potential to provide comfort to some pretty hard nosed and sceptical financial institutions to part with circa $300m (£250m) to fund exploration programme to a company with 1 producing well which is depleating and very short life span. So what does this add up to. ? .... HUR is not going out with begging bowl as no external creditor pressure so that is a huge plus. Two alternatives to bid, repayment of capital or new management team and prospects. My gut tells me that $130m (cash) + $250m tax credits equates to 17p, add future P6 production of another 10p to June 2024 (with p6 risk) and Lancaster field value (p8 NAV $250m). adds another 15p into the mix. Iwould argue 12p would be a reasonable offer. We should hopefully know by mid next week if not Monday! thats my take anyway.

To caveat that, I would say that the one reassuring thing is that everyday HUR is pumping OIl and as long as P6 behaves there is a growing underpin. I also think positively, that the dates highlighted have come about because someone wants the company. It is a very different scenario if the company is going cap in hand to third parties but HUR is a very attractive proposition now, how attractive is dependent upon the value attributed.

Good point T T , I suspect 7th purposefully chosen to allow weekend for consideration of any bids and then RNS on Monday.

By the way, if , CA and Buckingham are credible and they have seen data within Lancaster to support that kind of exploration splurge then everyone else will have. If only P8 looks like it can get over the line with a more proactive management team then I would revise my bid range up to circa 15p. Which would then give a discounted NAV of circa $70m to Lancaster including P8 (HUR management allocated a NAV of $250m). So all to play for!!!

I think we are sitting at 7.7p for obvious reasons. No one knows which option will be taken and that price is the offer price some weeks ago. The Serica bid for Tailwind, to me reinforces the fact that the North Sea is still attractive from an M & A point of view. I believe HUR will get a number of bids due to the simplicity of HUR and management being on side. I also still believe that the CA RNS has an element of stalking horse to it, as it focuses the attention not on to the cash position, the tax credits but the percieved underlying value of Lancaster field. £250m ($300m) is an awful lot of drilling change for a field that only has P8 as a potential.! CA are a credible outfit as is Buckingham so they must have something up their sleeve if they believe HUR with 1 depleating well can rise from the ashes and provide reasonable comfort to a group of bondholders to part with that kind of money in an enviroment where banks and financial institutions are steering well away from the North Sea due to the EPL and fiscal uncertainty. Going to be an interesting week or so!

one of the advantages of the PFS is that potential suitors will be able to directly clarify the projected Revenue figures from management. I still can,t add up the numbers. Assuming P6 behaves for the next 18 months to June 2024. Depleation continues at circa 100 BOPD per month and POO is averaging $90 . I assume net income at circa $225m, taking into account a cost per barrel increasing to $40 with lower production. Assuming circa $115m at end of this year would give a total net income of $340m. Now again assuming P6 behaves and company gives 6 months due notice to AM the $19m left in escrow should cover any legals and remaining tax liability. so the $340m should be distributable. However the company is only really planning for $70m + $110m +$30m which is about $100m short? Now again I am assuming P6 behaves and POOat $90, which is exactly the same as Management. So where is the shortfall. CRS are assuming a potential further 12 months of economic production to mid 2025, but I am assuming another 18 month with AM being given notice this time next year of 6 months break clause. Am I missing something as $330m is circa 14p . ?! comments/clarification/correction most welcome including Dad !!

I think that the FSP will be a success, although for LTH's the price achieved may still be painful. As you know I am targeting 12p. One of the reason's for confidence is that it is highly unusual for a company with a strong balance sheet and hence no external creditor or market pressure to put itself up for sale. To both allow potential purchasers to see warts and all what is going on and therefore mitigate any unseen surprises, but also to have the consent of management which will allow a smooth transition. This latter reason cannot be underestimated as support of exiting management can really make a deal highly attractive. HUR is now a minnow with limited future prospects ( in my opinion, regardless of the CA/Heritage potential), but a very tidy one. Cash in the bank, ringfenced liabilities and significant immediate tax credits together with a compliant management team I can see a number of bids, the ultimate question is how much those bids are for!

Haggis, good points.

I had a similar experience a number of years ago where a minority shareholder used an outside bidder to try and takeover the company with the intention of taking it private at a vastly discounted price. It failed but smelt really bad. The difference with CA is that , to me, the deal is so off the page and so disadvantageous to PI's that I cannot see anyone taking it up. HUR will be worth at least 10p cash by the end of 2023. If it isn,t then there is no way it could secure funds in anycase. If the Option was 15p I could see the potential but again it is just an option. But at 10p someone is taking the proverbial!

Good point. With the current production, due to be off loaded in early February, HUR should at $90 POO and production circa 8k per day have around $145m in the bank. Which equates to around 6.5p. I am assuming that discounted tax credits of circa $340m (maximum) are worth say $100m in any sale as they would be readily realisable to any larger producer. So worth say 3p. Add acerage and potential of P8 as evidenced by CA's mad RNS , I would target say 11p to 12p. Potential purchaser has covered their bases with the Tax credits alone. Say $250m realisable of $340m is circa 10p alone. Thats my take!

Im really sorry I just think the CA RNS doesn,t hold water on any level! I suspect/believe it is simply a stalking horse to push BOD ans the FSP. Which to be fair it seems to have worked. The terms of the offer to Buckingham doesn,t make sense. HUR taking all the risk, having to raise £250m, with limited cash flow to support, to then give away 15% of the company at absolutely zero premium in 12 months time. As I posted earlier I am hopeful that an offer of circa 12p will come to fruition .