Member Info for haggis_trap

Do the tax credits against previous losses have value for anyone taking over Hurricane?

What would the board consider to be a fair take over price?

Do the board have any plans, once debt repaid, to use cash pile to pay a dividend or buy back shares?

Alternatively, is future drilling on Lancaster to extend field life being considered?

While there was nothing new it was a decent presentation They didn't hide from fact share price is disappointing nor nature of challenges. Management seem genuine, switched on and likeable. I am sure this will eventually be a success - the question is how long you are prepared to wait ... Especially given other opportunities in oil/gas right now.

Aye : don't tell the Mrs : I can't even believe I am back in here myself. Hooking up with an ex never a great plan. However spent last night looking at the cash generation and it looks compelling given low share price.

Expecting a tick up once bond actually repaid on July 24th.

> I took time out but got back in last May before the court case & bought low,

good move & bold!
with benefit of hindsight wish I had done the same...
lets see what happens here next.

^ nice idea : though I am not sure LBE have the cash ?
Hurricane would cost ~ £300-400 million to buy out at 15-20p
..... which is alot more than LBE have available in bank (£26 million)

Like many I was burned by Hurricane the first time round...
However : With bonds about to be repaid next month HUR seems to be investable again ?
I must be crazy - however I am back in for the end game.

Some simple maths:
- Current market cap is £136 million
- Cash in bank is £130 million (company valued at cash in bank).
- Next month bonds are repaid (£75 million) and HUR are debt free
- Cash in bank for July 2022 forecast to be £70-90 million
- Going forward production is forecast to be 8000/bpd (240K per month)
- If company make $70-90 per barrel profit (opex $35 per barrel) then cash in bank increases at +£16-20 million per month (maybe more depending on oil price).
- HUR has ring fenced tax-losses of £380 million which would be very attractive to any takeover bid.

Yes, lots of risks remain.
- The company is entirely dependent on one well.
- The ESP could fail.
- Marris and the management are not be trusted

However once the bonds are repaid, which they will be, then the risks seems low.
From July onward every cargo from the Aoka Mizu is a bonus.
Fundamentally value of company should go up roughly in line with cash in bank (plus a little extra for tax losses)
Current share price only assumes another 2 months production, but company themselves expect 16 months.

Equating cash in bank to share price after every cargo.
July 22 : 90M cash in bank = 6.8p share price
August 22 : 110M cash in bank = 8.33p share price
September 22 : 130M cash in bank = 9.8p share price
October 22 : 150M cash in bank = 11.36p share price
November 22 : 170M cash in bank = 12.8p share price
etc...

If company were to keep producing until November 2023 (as currently forecast) then cash in bank could be significant.
Though like many I think the end game is near and a take over is nigh.
15-20p would be "fair" valuation as mentioned by many above.
Good luck all.

The main reason share price is drifting is funds like AXA selling before the exploration campaign is even over.
So perhaps another presentation might help alleviate that ?

Yip : I submitted a question asking for timescale to production. What the market clearly wants to see is revenue. Oddly the geopolitical effects / high oil price which seem to have priced LBE out of market, for now, will make any exploration discoveries more attractive in longer term. Norwegian oil exploration skills be good future bet (in theory)

> which at $5/boe is still only $19m of value.

current market cap is only £23M.
adding even a small amount of production / revenue could easily double the share price.
which would buy the board some time & patience to continue with exploration.
right now LBE is little else than a cash shell floating aim-lessly.

Market cap 23M.
- Cash in bank at last accounts 26M.
- Rebate of 7M due...
- Plus what ever the discoveries are worth...

The management need a proper boot up the @rse.
However now is not the time to be spooked into selling.
The current daisy picking is frustrating, however with low cash burn (100K per month) the company isn't going bankrupt.

Market cap 23M.
- Cash in bank at last accounts 26M.
- Rebate of 7M due...
- Plus what ever the discoveries are worth...

The management need a kick a proper boot up the @rse.
However now is not the time to be spooked into selling.
The current daisy picking is frustrating, however with low cash burn (100K per month) the company isn't going bankrupt.

Deltic energy could be possible future acquisition. Gas weighted, in North sea, possible low emissions and future exploration potential to be offset against Sunaks windfall

I share the frustration expressed. Also under water and tied in. Fundamentally the problem is that exploration takes time to appraise, develop and become profitable. Hopefully LBE can short cut part of the process by swapping discoveries for production.

> So at the low end LBE have net 7.45mmboe, which at $5/boe is worth $37.25m, or £30m,
> which is pretty much our market cap.

Plus £26 million in the bank and an exploration rebate due in Q2.
So even at 50p I think the current share price is low and broadly equivalent to cash in bank...
The discoveries to date not even covered by market cap.
As mentioned many times the problem is LBE are not yet generating any revenue.

Final comments:
1) Norwegian tax breaks make exploration very cheap. The 7 well campaign cost LBE just £7.8 million net
2) LBE equity raise was £35 million. That doesnt buy much production (for comparison Kistos raised £220 million and were able to purchase Tulip assets straightaway).
3) Company has plenty money to keep going for now. Expenses are ~100K / month.

Exploration might still prove to be a good longer term strategy. With a couple of good strikes and fair swap into production the share price could easily be £2 (which delight us all). The problem is that we really need another good discovery this autumn to bring something interesting to the table in near future. My heart certainly sank when Cambozola was a duster.

Summary : More patience sadly required.

^ Fully agree ! I remain hopefully that by autumn / end of drill campaign there will be enough accumulated discoveries to swap for production. Todays news not good - but 2x more drills to follow in quick succession.

At today's depressing share price (50p) the market cap of company (£29M) is only slightly higher than cash in bank (~£26M) from last accounts

Obviously disappointing result. Though existing discoveries plus cash in bank should support current share price.

> so if no debt where does that take us

one of the AGM voting items was to allow board option to a pay a dividend.
other option would be to buy back shares. time will tell! both would support share price.

So my "tories are communist" comment was trolling with tongue firmly in cheek. Mainly in response to the zoomers on here who claimed the SNP would grab the profits from the North Sea. The irony is that HMRC/UK are the ones taxing HUR at an astonishing 65% following Sunaks cash grab.

My main objection to the windfall tax is that we should be supporting the North Sea to maximise recovery for next 30 years. Norway a good example of what we should be doing : it is now a much more attractive place to do business with potentially bigger returns for those prepared to risk the investment of exploration.

all joking aside : Norway looks very good place to be invested in oil (Generous exploration tax breaks and supportive government)

> need to deliver for loyal retail investors because time is now very running out!

^ my guess is that LBE hope to have enough accumulated discoveries by Autumn to make a worthwhile swap for production. Then do re-invest into more exploration all over again? Only once generating revenue will we see this share price move. Price of oil has amplified the risk, but all the potential reward, of the chosen strategy.

For today : just be grateful that as a loss making explorer the windfall tax hasn't hit us hard ;-)