Member Info for HeidHoncho

The irony is pure comedy gold.

States that others are posting " unsubstantiated and based on peoples hunches", then follows that up with their own unsubstantiated hunch "Nothing will come out next week, the week after, or the week after that. Hold tight and come back in a few months".

Smacks of, don't do as I do, do as I say.

IMHO

sharefall, the company is not currently bankrupt, nor is it currently insolvent.

Unless that is, that the BoD choose to state that they are, and I assume that would receive a prompt legal challenge by C.A. were that action be attempted.

IMHO

RetiredBanker, with regards to the liquidation event the company has recently publicly stated "executing a wind-down of operations commencing when production from the field is no longer economic".

On that basis, the " a controlled wind-down of the Group's operations followed by an insolvent liquidation of the Company." identified in your post (which is a mirror of the statement previously made by the company), would mean that the liquidation process would not begin until production from the field is no longer economic.

The utilisation of the word "following" would mean that it is an concurrent event to occur once production is no longer economic, and not a consecutive event.

Given that the field is still currently producing economically, then there is no credible reason for the BoD to declare insolvency on Monday afternoon if the ruling is against them, as that would be contrary to the stated progressive plan that they recently made were the NFA option be enacted upon after a failure to agree a way ahead with the current bond holders.

IMHO

They stated that it was “bopd”.
Barrels of OIL Per Day, not Barrels Per Day.

In the video clip that was shown of Zara giving an interview in the FRGC/FEGL (note, he has been at pains to ensure that FRC never had offices in Georgia) offices in the latter half of 2020 (I think), who was he representing himself as in that interview ?

If he was representing himself as the CEO of FRC (I don’t recall, hence the question), as opposed to solely representing himself in an FRGC/FEGL position, then that would be a bit naughty wouldn’t it ?

Representing himself as the CEO of a company in the offices now solely held by the companies that the liquidators had appropriated from the company he was still purportedly representing.

“Oh what a tangled web we weave when first we set out to deceive.” ........ IMHO

British, the company already have restricted (not included in the free cash figures) funds of $51.6 million relating to AM early termination penalties and decom costs.

A further circa $15 million will be added to those restricted funds in June.

The company have projected de-com provisions to be $61.2 million.

Like I said, I am not an accountant, therefore little sense in me conducting a forensic review of the PWC figures, though I am sure there must be some shareholders out there who are more accounting proficient than I who could conduct such a review.

“eating” not “earring” dagnabbit !!

maddog, look on the bright side.

Surely the squirrels earring your leaves is better than them nibbling on your nuts.

In an attempt to try and answer some of the questions below, and I am not an accountant, merely a shareholder reviewing company published results and projections in a logical manner, the following salient points may be better investigated by those more qualified in accounting than I.

During 2019 2,874,000 barrels were uplifted at an average sales price of $59.30, and an associated production cost per barrel of $21.80
During 2020 5,112,000 barrels were uplifted at an average sales price of $35.20, and an associated production cost per barrel of $17.90

The above facts are detailed as it would give us a credible production cost per barrel for utilisation in the following cash calculation predictions.

Also utilised in the following calculations are production projections, and oil price projections, that the company have made.

In an earlier post I may have made an error as to future production figures, as I utilised an up time for the AM of 95% and then subtracted 5% from the company’s projections.
This I shouldn’t have done, as the company’s average daily production projections should have accounted for that, hence I have removed that double dipped up time discount going forward.

Previous results show that production costs are $17.90 per barrel at 5,112,000 barrels of production in a year, and $21.80 per barrel at 2,874,000 barrels of production per year.
Therefore I have utilised an arguably credible projection of circa $20.00 per barrel for 2021, and circa $21.00 per barrel for 2022.

Projected production (company supplied) in 2021 is 3,613,500 barrels, and projected production volumes in 2022 prior to the bond requiring paid is 1,774,800 barrels (3,175,500 for the full year).

Projected (company supplied) average oil price through 2021 is $63.40, and throughout 2022 is $61.00

Projected cash generation in the period is $337,358,700 (3,613,500 @ $63.40 + 1,774,800 @ $61.00)

Projected production costs during the period is $109,540,800 (3,613,500 @ $20.00 + 1,774,800 @ $21.00)

The differential being $227,817,900

I accept that there is likely to be circa $40 million to be paid out on bond interest payments & fixed lease payments for the AM over that period (1.5 x costs witnessed in 2020), and there are other office/corporate overhead costs etc, but we should not be seeing any significant capital costs (amounted to circa $62 million in 2020) during this period as there are no further plan in place other than the NFA plan currently.

Hence, I feel it credible, that even allowing for other costs to be required to be paid over and above the production costs during the period, that with the cash (revenue minus production costs) available during that period of $227,817,900, that there would be sufficient free cash generated, when added to the free cash available at the end of 2020, to pay the outstanding bond of $230 million.

IMHO

mcidiot, the fact we are almost in June was accounted for.

Given that we are 146 days into the year, utilising a 95% uptime for the AM, the projected average production during 2021 of 9900 barrels per day, the projected would only have reduced by 1,373,130 barrels.

All of the figures that I have quoted are from recently published company RNS’s, so where you state “I know what I know” that evidentially does not trump documented company produced facts.
Unless that is, that you are implying that the company are not telling the truth.
Is that what you are inferring ?

Okay, let us look at the issue from another angle, yet again let’s stick to the facts recently published by the company.

The outstanding bonds are for a value of $230 million.
As at the 31/12/2020 the company stated free cash was circa $111 million.
At year end that had the company short by circa $119 million.
Between the 31/12/2020 and the date that the bonds are due to be paid back there are a remaining 569 days (365 in 2021 and 204 in 2022).
Utilising 95% uptime for the AM that would equate to circa 541 days.
The company are projecting average daily production during 2021 of 9900 barrels per day, and 8700 barrels per day throughout 2022.
That would equate to 3,432,825 barrels of production during 2021, and 1,686,060 of production in 2022 prior to the bonds requiring repaid.
The company are forecasting an average oil price throughout 2021 of $63.40 per barrel, and throughout 2022 they are forecasting $61.00 per barrel.
Utilising that company projected production projection, and utilising that company projected oil price, that would project a revenue between the 31/12/2020 and the date that the bonds are due, of a figure in excess of $320 million.
I would suggest that it is credible that from that level of revenue there would be a sum of free cash generated that would cover the $111 million of free cash that wasn’t available to pay off the bond at the end of 2020.

Free cash generated between the point that the bond was paid off to the point that the company have projected that economical production would continue to (2024) would be in excess of circa 18 months, and that free cash would be available for distribution amongst the shareholders if indeed the company was ultimately to be wound down.

And the NFA option is the option that is likely to be the least ultimately beneficial options currently being proposed, and should the current bond holder stranglehold be removed and a more shareholder interested BoD replace the current BoD, then other more production incremental options be considered.

IMHO, but based on verifiable company produced fact.

slack bladder, you continually harp on about there only being 7 million barrels left, and by next year there will only be 3.5 million barrels left, but this is at odds from the recent company RNS which stated there to be more.

A statement made by the company, with regards to the NFA (No Further Action) option, the one in which no further production enhancement operations are sanctioned, and the company is gradually wound down.

“ Assumes no further investment in the Lancaster field, with Hurricane executing a wind-down of operations commencing when production from the field is no longer economic. Decommissioning would follow as soon as practical after production ceases

· Economic limit: February 2024 (at the forward curve1) with potential future recovery from the Lancaster field of 10.0 MMbbls (at 1 Jan 2021)”

The above clearly indicates that the economical limit would not be projected to be reached for a period of almost 3 years from now, and the potential recovery figure with no further production enhancement operations being performed would be in excess of 10 million barrels.

Consequently, so with the current oil price being what it is and with the industry accepted oil price being projected to be circa $60, then all we need do is ensure that we have sufficient funds available to pay the bond holders back in around a year from now, as that would get that monkey of our back.

The FCF from that point on would then solely be to the shareholders benefit, so even IF it was necessary to raise a few tens of millions by means of a rights issue to ensure there was sufficient funds to get the bond holders off our back then that would be recouped in spades throughout the remaining duration of the wind down period.

The remaining free cash (allowing for realistic de-com costs) at that point could/would be distributed to the shareholders by means of a dividend.

With the current economical production volumes remaining as stated by the company, and the revenue generated over that period being that which it is projected to be, then it is credible to project that the shareholders would have a 9 figure sum available for distribution.

And with a plan to get the current bond holders out of the way, and the insertion of a BoD who are less bond holder biased and more shareholder biased, the NFA option is the very worst outcome, so any further production enhancement operations being ultimately potentially enacted would even further improve the shareholders position exponentially.

Sad state of affairs when so little effort is put into reviewing positive potential opportunities, and exerting all one’s energy on trying to formulate doomsday scenarios.

IMHO

A statement made by the company, with regards to the NFA (No Further Action) option.

“ Assumes no further investment in the Lancaster field, with Hurricane executing a wind-down of operations commencing when production from the field is no longer economic. Decommissioning would follow as soon as practical after production ceases

· Economic limit: February 2024 (at the forward curve1) with potential future recovery from the Lancaster field of 10.0 MMbbls (at 1 Jan 2021)”

Therefore, not only are they detailing that a further 10 million barrels may be recoverable were no further actions taken and a phased wind down of the company enacted, and the economic limit is not projected to be reached until as far off as Feb 2024 (almost 3 years from now).

And the winding down of the production not commencing until such time as it is uneconomical, which is currently projected to be almost 3 years from now even if no further action is taken.

So, not quite the imminent doomsday production scenario that some would have you believe.

IMHO, and based on projections made by the company as recently as this month.

A statement made by the company, with regards to the NFA (No Further Action) option.

“ Assumes no further investment in the Lancaster field, with Hurricane executing a wind-down of operations commencing when production from the field is no longer economic. Decommissioning would follow as soon as practical after production ceases

· Economic limit: February 2024 (at the forward curve1) with potential future recovery from the Lancaster field of 10.0 MMbbls (at 1 Jan 2021)”

Therefore, not only are they detailing that a further 10 million barrels may be recoverable were no further actions taken and a phased wind down of the company enacted, and the economic limit is not projected to be reached until as far off as Feb 2024 (almost 3 years from now).

And the winding down of the production not commencing until such time as it is uneconomical, which is currently projected to be almost 3 years from now even if no further action is taken.

So, not quite the imminent doomsday production scenario that some would have you believe.

IMHO, and based on projections made by the company as recently as this month.

Just a potential alternate proposal, for others to utilise as a nucleus to base there own proposals on.

Clearly people were comfortable with paying £0.02 per share for a period of time yesterday, so let’s utilise that as a basis to form a proposal on.

Let us consider a two for one rights issue for instance.

Granted that rights issue would be at a premium to the current share price, but let us park that for a moment to see how it all unfolds.

That would generate £80 million for the BoD (though not necessarily the current duplicitous ineffectual one) to utilise to progress a phased programme of production improvement, the goal being to achieve incremental gains in the elevation of the SP for their long suffering shareholders.

I suggest that it is credible to opine that were this to be achieved, making working capital available to the company, and removing the threat hanging over the SP due to the current BoD’s proposal to gift 95% of the equity to the bond holders, that the SP would then be £0.03 or greater.

For example, were you to have originally held 1 million shares at an average price of £0.06 (the share was floating around that SP for approximately the preceding 6 months to the kitchen sinking in earnest by the BoD in September), and then purchased a further 2 million shares in the rights issue at £0.02, your total capital invested would be £100,000.

Given that the minimum creditable expectation of the SP post raising £80 million in the rights issue being £0.03 (though I feel it would be realistically higher), then you would still have as a minimum of £90,000 of equity invested, but with the likelihood that you would have a positive investment, as the SP would only require a 10% increment in that minimum SP to achieve that.

The end result of a successful rights issue as posed above would be that it is the current shareholders that would benefit, and not the usual share flipping freeloading gutter snakes that would normally benefit through placements/open offers.

Additionally, that would mean that the entire equity would be retained by the shareholder, and the sharks that are the bond holders, instead of diluting the current shareholders and leaving them with only 5% of the company for a derisive mere $50 million reduction in the debt that they hold over the company, the bond holders would receive nothing other than friction burns on their palms brought about by the undoubted wringing of their hands caused by being defeated.

Just a nucleus of an alternative plan for how the company could obtain the funds to stave off the wolves from the door, progress the future of the company, and the benefit of this progress being to the benefit of the share holders and not the bond holders.

Would like to see other potential proposals being offered up for consideration, but I wanted to get the ball rolling by putting that challenge out there.

Night all.

.... that being as the BoD have not attempted a placing, or open offer, nor specifically a rights issue, in attempt to provide the means to progress the assets then it is wrong to say that all other avenues, other than approaching the bond holders (who obviously have a benefit were funds not to be obtained), to attempt to secure the minimum funds necessary to secure the future of the company for the benefit of their shareholders (which is their number one obligation).

To have singularly prevented their shareholders, through not having exhaustively investigated/attempted a rights issue specifically, then the BoD have purposefully prevented their shareholders, whose interests they are primarily obligated to protect, from having the opportunity of being able to protect their interests.

I wondered how a court would perceive the actions of a BoD that have purposefully, through the negligence to offer their shareholders the opportunity, prevented their shareholders the a potential ability to ensure the progress and continuation of the company that they are invested in.

Whilst at the same time, currently preventing the shareholders from attempting to protect their interests through the removal of the individuals who are apparently singularly unable to meet the obligation to protect the companies shareholders.

In essence, the BoD have prevented the shareholders whose interests they are duty bound to protect, both the ability to potentially protect their existing capital that they have invested in the company by means of a further injection of finance, and by delaying the ability for the shareholders to protect their interests through the removal of the impediment that is the current BoD members through not expeditiously offering them the opportunity to do so.

I’m not sure that a court would look favourably on a body voting themselves (or in this instance, preventing the removal of) to be both jury and executioner.

IMHO

Slift, interesting, might be worthy of further investigation after all then.

1) If Hurricane did not set aside $36 million from the 2017 fund raising, then wouldn’t they have raised the money under false pretences ?
They did state in their document that $36 million of the total funds being raised was to pre-pay the decom costs.
Having set aside only circa $23.5 million, with a further $15.7 million having to be funded from FCF is neither meeting the commitment that they made as the basis for the fundraiser that they made, nor is it an expectation of the shareholders to then latterly find that this shortage requires to be made out of FCF.
This admission by Hurricane that they did not meet the basis of the funding that they committed to when raising the money might leave them open to questioning on that score.

2) The JV stated that pre FID Hurricane was to be free carried up to the value of circa $185 million or so if memory serves me correct.
Hurricane were not liable for 50% of the costs until FID was approved (phase 2 of the JV).
Being as FID was not approved, and consequently still being in phase 1, then Hurrice would still be on a free carry, and as such all decom costs would be to the JV partner’s account.

Just IMHO you understand.

Right, Mr Sandman beckons, night all.

“ Goldenbadger - your calculations are missing other factors such as....

"total of £28.0 million ($39.2 million) of cash restricted as decommissioning security"
and
"The GWA joint venture has contracted a rig for the Lincoln-14 plug and abandonment, with a gross budgeted cost of $13 million for this activity" to name just a couple of expenses to pay from the cash.”

Two points made there that may be open to conjecture/challenge.

1) when the fundraising occurred in 2017 the document stated that a proportion of the funds being raised ($36 million) were for, and I quote “De-commissioning pre funding”.
That being the case, then either these funds have already been set aside/ring fenced, and would therefore not be required to be funded from the FCF figure currently muted as being available.
or
The $36 million would require to still be accounted for from within the FCF figure currently being muted, and were that to be the case that would mean that the agreed purpose of the funding conditions not having been met.

Without conducting a forensic review of the most recent company financial report, which I am neither qualified or competent in doing so, then I cannot confirm whether that money has already been set aside.
But if it has, as the company portrayed in a legal document that they would be doing, then why is anyone concerned that this sum of money ($36 million) would eat into the FCF figure that currently exists towards paying the bond off.

2) With regards to the sum of money (your post claims this to be a sum of a budgetary $13 million) for the P&A of the Lincoln well, is this a cost that Hurricane are obligated to pay/finance, or is this a figure that the field’s JV partner would be obligated to pay/finance, as part of their JV obligation.
i.e. the JV partner made a commitment to pay/finance a certain value of the JV’s cost, so perhaps that suggested P&A cost falls under the JV partners obligation, and is not a figure that Hurricane require to stump up.

Were that to be the case then that is a further $13 million drain on the current FCF figure that we wouldn’t require to be concerned about.

I cannot be certain of either of the above 2 postulations, but I’m sure that there are those more adept at investigating the above, were they to be mindful to do so, as I’m merely bringing it up as a point for consideration to confirm, or deny, some of the cash flow drain scenarios that some would have you believe exist as fact.

Night all, and I look forward to the RNS, or perhaps more than one RNS, that is likely to be released tomorrow.

With regards to the BoDs apparent derisive actions towards their shareholders, I quote directly from HUR regarding their obligations with regards to their shareholders.

“ The Board is collectively responsible for the long-term success of the Company. The Board is also responsible for setting and leading the Group’s strategic targets and objectives and ensuring that they are properly pursued and that major business risks are actively monitored and managed, which goes beyond regulatory compliance and puts the interests of Hurricane’s shareholders at the centre of the Board’s decision making so as to be accountable to the Company’s stakeholders.”

The key phrase contained being that they are obligated to put “the interests of Hurricane’s shareholders at the centre of the Board’s decision making”.

It should then come as no surprise why the judge found the BoD to be singularly wanting in that respect, and is an issue that he will be looking for the BoD to rectify prior to appearing in front of him in court on the next scheduled court date.

Failure to do so would logically weigh heavily on any judgement that he is likely to make.

In departing to watch the GP I noticed your post.

Not too difficult for the judge to identify.

It is a court of law, therefore a truthful answer must be given.

He merely need ask if Kerogen are indeed bond holders, and if need be that request could be conducted in chambers should confidentiality be required.

With that information, the judge can make his own summation as to whether the Kerogen BoD members leaving the BoD at the same time as the apparent capitulation in preference to the bond holders started gaining traction.

If Kerogen were indeed bond holders I’m sure they wouldn’t want to be associated with any perception there may be that there was a conflict of interest in both being bond holders (if indeed that is the case) and members of the BoD.

IMHO

Right, deffo away off now to make vroooom vroooom noises.

As recently as January this year, the BoD stated “A continued recovery in oil prices would further enhance the significant value we see in our West of Shetland portfolio.“.

Given that the oil price has indeed further recovered since then, and according to the CPR, as conservative as it potentially is, there is still a significant asset value from the currently contingent reservoir volumes associated with the current Lancaster volumes that are not as yet P identified, the contingent volumes in Lincoln, and the contingent volumes in Warwick (don’t forget, these assets have already been proven to flow).

So, what has changed between then and now, other than the abject inability of the BoD to come up with a credible finance provision to gain the reward from these “significant” resources, and the apparent desire to capitulate to the bond holders in a manner that is clearly detrimental to the companies shareholders who they have an obligation to protect the interests of.

Anyway, the F1 is now on, so I’m off to see some hydrocarbons to be burned off.