Member Info for GloucesterR

1st qtr.

I suspect with the FSP underway, Management will be much more concious of corporate matters including hedging of any currency risk. Even Maris will be aware of $ v £ after HUR got its fingers so badly burnt. So I don,t worry about the strength of sterling now post decision to put HUR on the market as the company has no reason to protect itself against a fall in sterling, but very much against a fall in the $.
I also agree that POO is very likely to rise and I am targeting $105 for 2023 which is the concensus in the industry and the one that I am sure will be in the minds of any potential acquierer .
I also think that come 3rd qtr the capital distribution will be more like 4p as the company has more clarity over where things are moving. But hopefully we will all have been put out of our misery with a 12p offer!

I believe windfall tax is due to be extended in duration and also increased from 25 to 30 percent. Strangely may be in Hurs favour re potential purchaser as make UK tax front and centre and give increased focus to tax credits for non EPL profits.

On a tangent I can see China introducing considerable stimulus in coming months as China opens up and both demand and supply constraints both become rail winds for POO. Maybe not $120 but $105 for most of 2023.

I think on average p6 is declining at the rate of 100 barrels of oil per day every month. So 200 per offload. So we should see circa 8200 for November production and 8100 for December. So by June which is Sense's timeline we should be down to 7,500. The key is the Oil price, which is obvious. As the profit on $100 oil compared to $90 oil is around 150 barrels of oil per day. I agree somewhat with Sense. That management projections are incredibly conservative but understand why. I am targeting $250m by end of 2023.

I figure a time line if circa 6 weeks to flush out any offers. Stiffel will act like any estate agent and give unofficial indication as to fair and reasonable baseline. Most info re Hur is in public domain. Key is reservoir info and of course the reasonable value of tax credits. If no offer by end of the year I think plan b will be put into operation. My take is that company, as usual overly cautious on cash balances and if next 2 offloads achieve circa$100 then net cash should be around $150m. I would then expect distribution of circa $80m or 3.6p. I simply cannot see anyone not bidding for the tax credits the discount is just too attractive especially if EPL extended, as Oilers will want to mitigate non EPL tax as much as possible.

Completely agree with Sense. The wording of RNS is purposely opaque, but to me refers to the monitising of the shareholding , ie the 3.1p potential q1 2023 capital reduction.

On a related tangent. It looks like ,at last China is beginning to open up. This will very likely bring the POO floor back to $100 and a tail wind.

Sense I expect CA made it clear that if HUR didn't get the formal nod for P8 they wouldn't give their approval to take the risk .

Completely agree with Dive and Sense. Hopefully as part of Open Book sale process this over caution will become evident and some value attributable to p8 in terms of offer. I suspect CA would have wanted pretty firm guarantee and so would have made their feelings known re exit.

Kooba has raised valid question re tax credits. In a former life as a commercial lawyer for a very large city firm I would like to confirm that in my opinion a Purchser will be able to utilise the remaining tax credits if at thetime of the transaction Hur was still producing from a UK field. The new entity would then benefit from the post p6 taxable income from any other group UK production. So yes very valuable. The level of tax credit would depend upon the deductable allowances but this would be the same for Hur or a purchaser of Hur. I hope that makes sense. As I have posted before I calculate a discounted value if circa 3p.

Thanks Sense and I hope you are feeling better. Thankyou to everyone for showing compassion and hopefully mutual respect going forward. Its now a binary choice for HUR sale or pump until uneconomic. But basically all we want is the highest possible price. The key for me is the value of the tax credits as that is the unknown. By opening up the books any purchaser is now able to carry out their own d/d as assess how valuable those losses are . I believe CA felt circa 6p. The benefit of a 20per cent fall in Sterling since that calculation (which I think is reasonably accurate) should see HUR achieve circa 3p giving a further 60per cent discount £ . Thats my take anyway!

I think any offer will be on the table within 6weeks or so. I don't think there will be any site visits, simply paper documentation including data room.. Hur is a simple 1stop shop and time limited. The longer negotiation goes on the further the goal posts change as cash is increasing and hence potential profit margin for purchaser reduces. The key I believe is the calculation for tax losses. Gross maximum 15p currently, but with market discount circa 3 to 4p. This represents around 50percent of current market cap. So fingers crossed by X Mas we might have a number of offers.

Now that Hur has placed itself on the market. Potential purchasers will no longer be making "blind" speculative offers. This low ball offer I still think may have been a stalking horse for CA to pressurise management to come up with some corporate event. It has certainly worked and couldn,t be better. Either a fair price sale or pump until dry but management committed to distribution rather than hang on to their well paid jobs and even look to invest into a speculative project. So a great result however it came about. But for me the benefit of a Formal Sale Process is the transparency . Through the investment house potential purchasers will have sight of the books and the data room. They can use their own tax people to check on the net value of the tax credits which I believe to be key to any fair price. Will POO at elevTed prices for the next 12 to 24 months any purchaser can benefit from an almost immediate offset rather than waiting years for such allowances to be utilised. The imminent extension of the EPL will only encourage any tax saving against non EPL tax. So assuming circa $340 of maximum taxable credit. A fair discount would be say 75percent . So say $80m which would equate to circa 3.5p per share. Or almost 50percent follow ball offer. Add the possibility that the purchase may be cash and paper and it becomes incredibly attractive to a purchaser. My gut feeling as I have said before is circa 12p . If we pump till dry that tax benefit dies so it is a bit of poker, but with China likely to open up and the EU embargo in a few weeks we can only see POO going above $100. Thats my take anyway!

Is likely to list on November 9th I wonder if some short term production ,but more importantly tax credits would be attractive.

So Bloomberg analysts looking at $110 to $120 Oil by the end of the year once full impact of EU embargo takes effect. Add likelihood of China slowly opening up in New Year and they believe a perfect storm. Could be a really precipitous time for Hur to go to the market. Benefit of tax losses to larger player is that they will become avaliable immediately to offset 2023 UK produced revenue.

$350m mid 2024!

Cebo agree. My take is that HUR will have circa $350m net cash assuming $90 Oil and continued depleation of field and p6 behaving. That equates to circa 15p excel tax losses. So win, win. Bird in hand at say 12p or 18months and 15p total with any rump of tax losses . If POO increases to say $100 as anticipated then circa $400m and 17p.

Fandg. Good question. My understanding is that the gross CA figure relates to total taxable allowances of circa $1.5b. Whereas the HUR RnS relates to the actual tax saved. Ie circa $370m. As we know this is the maximum and one of the reasons why I can only see another Oiler bidding reasonable value as another investment fund would not really take these valuable losses into account. My personal view is that the gross value of losses is circa 14p max to HUR but reasonably I would expect 2 to 3p maximum or $70m . I still believe an offer around 12p will come out of the woodwork eventually. It may even be that a bigger player with more dynamic bod reasses the risk of p8!

The likely purchaser ,if there is to be one that makes an acceptable offer, will be another O&G entity, as the tax credits make up such a significant part of valuation. I suspect the offer received has come from a hedge fund smelling an opportunity having been knocked back by CA. ( indeed C A may have encouraged the offer as a form of stalking horse to get Maris to make a decision re plans) as the offer didn,t take into account the embedded tax credit value. My gut feeling is an offer at circa 12p will be made. Whether shareholders find it acceptable is another thing. But I'm putting my hat down now at 12p !

Its great news. 2023 should see net income of circa $150m at $90oil giving a circa 6p addition to where we will be at end of year. So QTR 1 distribution really sensible and will set stage for qtly distribution s thereafter of say 2p. So any offer now will have to be circa 12p plus to give some value to tax credits.

Yes can you imagine the positive impact on the SP if the BOD announced that it had decided to focus solely upon P6 production to mid 2024, that it was open to offers for a buyout incorporating significant tax credit and that a structured programme of sharebuybacks would be instigated.! 20p by mid 2024 would be a real possibility at $90 + oil.