Member Info for Jonno41

It very common in my experience for dilution to come at a premium to the share price. Why? Because dilution gives money to the company which help the company move forward and achive its goals. Buying shares on the open market does not give any money to the company and so does not improve their outlook. Investors will see that buying shares from the company - so supporting them, will relieve the pressure of uncertainty on the SP and allow it to move upwards. The concenr is the amount of dilution that would need to occur in order to make a difference, which is why I think it is unlikely. And the more likely outcome will be a loan of some sort, or more bonds, or farm out, or even sale.

As we have all said CPR upgrade is key to all of this

Not sure why everyone seems to think dilution will be at a lower price. My theory is the RNS sent out in December that dropped the SP was worded so negatively to drop the SP and so allow for dilution at a higher price, say 3.5p. That way an RNS that mentions dilution is recived more positively and potentially causes the SP to rise to this level. My thought had been that when the RNS was sent out the SP was 4p -5p and that RNS was intented to lower the SP.

Its just a theory, dilution could come @ 1p but I do not see how such a bad deal could be struck bearing in mind our situation. Additionaly what might of been agreed in Decmber could of changed in Jan/Feb due to the POO.

As it derisks or potentially even reduces/negates the need for finance.

Agreed with most of that Fevertree... its interesting what you say about buying back bonds being more costly than the current price. I do not really see why bondholders will be nervous, there is more than enough cash from oil revenues to pay back the bonds espeically at these oil prices.

Directors made small buy late late year, but yes I would of expected to see much more buying. The bottom line is this share does not appear leaky, and if the board knew reserves are about to upgraded then they would not be able to buy. So the lack of buying might not be negative

What I find particulary disappointing is that the board have sent out an RNS citing low oil prices as one of the reasons why there might be little left for shareholders, but not sent out another one when the oilprice goes up 50% + to say how this - if sustained - will change shareholders fortunes. The value from oil is probably 100% more than when the RNS was sent out, and the equates to $87.6M per annum increase in profits, assuming 12K BOPD averaging $60 a Barrel

That is more than the MCAP, so I don't really see how we can fail to see the SP increase.

Just need board to be more vocal on positives rather than negatives

Thanks - if this is true then we can clear all our debts for around $100M - technically we could do this and side track without any more borrowing. Agreed it we do not up our CPR that would then leave shareholders with "not much" although more than current MCAP - but if CPR increases then we become an extremely valuable debt free company - with a high POO - there is incredible upside here and minimal downside.

Also we are all assuming that if Hurricane does not ncrease CPR game over - not necessarily - if we pay off debts and have some money in the bank, we could buy new licenses, farm in to existing assets etc. but I suspect they will find a way to get alot more out of their existing assets, the complexity of their assets and the fact they have reduced their reserves to absolute minimum means chance of further testing which is happening now increasing reserves seems pretty likely.

Right now, I'd rather be CA than Astaris....

Howevever, Hurricane have a recent trend of sending out terrible RNS's... lets hope that changes... and soon.

Do they not have to be settled @ PAR (so the value they were sold at)? I do not understand how bonds work either, but as far as it seems, PAR is $60+ and current price is $27. Does that mean you can buy a bond @ $27 and receive 7.5% interest on the actual value which is abut $65. And then receive $65 per bond in July next year assuming Hurricane can settle them? So that presumably means the market assumes Hurricane will not be able to settle the amount which is why the price is so low? Is that how it works? And yes then the final question, can Hurrican b orrow $100M to settle the bonds and more than halt their Debt. In fact they could conceivable buy all the bonds back with the money they have in the bank and become debt free?? I must be missing something....

There has to be an amount of brinkmanship going on here. If Amigo make it clear that they go out of business without the scheme being approved, it puts pressure on the FCA and the borrowers to vote for the scheme - if you perceive the option to have something with a scheme or nothing without one, borrowers, bloggers are likely to vote for the scheme.

The FCA on the other hand is more complicated as if they back the scheme they are setting a president other companies could follow.

The key thing the FCA must do, is stop a largre proportion of compensation going to CMC's. This is not in the interest of anyone (apart from CMC's) so having a scheme framework which gives a companies in Amigo's position guidance on what a scheme needs to have in order for it to be approved seems the most sensible option.

It defies logic for the FCA to create a process that is complex enough to need a CMC. They need to penalise Amigo, not rewards CMC's FFS. And they need to work with Amigo towards approving a scheme as it make sense for all parties.

My concern as a shareholder, is Amigo are forced to agree to unfavourable terms in order to get the scheme endorsed by the FCA which the markets might not like. But any terms that allows Amigo to start lending again under a controled scheme redress should bring us a very good return at this rediculously low SP.

GLA
DYOR

Thanks Daltry, great to see a tick up in SP. Hopefully we'll see some good positive momentum next week.

Jon

I honestly believe if there is dilution it will be at a premium to the current share price. I know I have been shot down in the past for suggesting this but its not that uncommon. The recent RNS's have been written to cause the SP to first of all drop and then drop again. I believe this could have been in order to announce a "good news" dilution/funding - if there is such a thing - say @ 3.5p. The SP would then rise because the dilution is at a premium to the current price and because funding is then out of the way. Personally if I was invited to invest in hurricane @ 3.5p I would probably agree knowing the likely increased in the SP once its announced. This is why I have added.

Of course the biggest question mark hanging over Hurricane is whether the they can upgrade their resources through further testing. If they did and it was consderable, bagger becomes serious multi bagger because the coimpanies worth jumps through the roof, especially @$60 a barrel.

And of course dilution does not have to be the case, there could be more bonds, farm out etc. all of these would probably be good outcomes and the sp would rise again.

The bad outcome would be bad dilution or funding on bad terms, but I suspect this is unlikely, and far more unlikely than it would have been in Q4 last year, when Hurricane made its announcement citing low oil prices as one of the main problems (which have now increased by 50% meaning there revenue is increased by possibly as much as 100%)

GLA
DYOR

Lots of large trades going through on both sides. The sells might be traders exciting who has bought in under 2.5p and are looking for 10% in a week or so. Be interesting to see if there is a big buyer and ocne the day traders have been flushed out we might then see a sustainable rise.

News must be changing in a favourable way every $ added to POO.

Dalty, yes I totally agree that renewables will have a bigger and bigger part to play, and I am all for renewable energy over dirty power. The analogy I was making works even if demand is shrinking. There may be less demand and less production, but the suply/demand relationship continues to work - so say the worlds demand for oil drop from 100M BOPD to 90M BOPD, thats still alot of demand to meet. We will hopefully see the demand for oil contine to drop but the supply will drop with it and there can cerrtainly sill be an under supply scenrio with falling demand. Partially because the supply is carefully controled and partially because of the lack of R&D that is currently going into Oil.

When oil prices are high, companies invest in exploration and exploitation and over time production increases. When they are low they concentrate on production and over time oil reserves decrease. New discoveries take on average say 3 years to turn from discovery to production. And this is why oil prices rise and fall . When they are high exploration goes up and then a whole load of new discoveries hit the market causing production to rise and therefore a surplus to build up and prices fall.

Point is oil price has been depressed for years, many explorers are bust and many big oil companies have cut spending on R&D, so when the pandemic slows and oil requirement increases, we are likely to see higher prices for a while due to the lack of new discoveries coming on line. Once we see sustained high prices, money goes back into R&D, new explorers are founded and so the cycle continues....

I admit this can be broken due to US shale, Saudi, OPEC etc. but wih Biden in power shale wont flow so quickly and it is of course in the internet of Opec countires to cut production in order to sustain a higher oil price, which is of course what we are currently seeing.

GLA.

Thanks Lonestag, looks like the sidetrack planning has already started which suggests confidence (unsurprisingly) that finance will not be a problem. Interesting quote from the previous Hurricane RNS suggesting once the side track is producing, it will generate further data which could help in further development. Does not sound like a company about to sent to the scrapheap does it....

Production from the tie-back would generate reservoir data to be used in planning future phases of development.

If you start mulpying the retate in the oil price and compare it to the oil price when the funding RNS was sent our in December, the additional revenue is off the scale. If the oil price averages $20 a barrel moew than when the RNS was sent (so say $60 which is about $2 under current value) and we produce 12K a day 12K*$20*365=$87.6M in additional revenue per year of $7.3M a month. Its a complete game changer, and I think the Oil market is more bullish than bearish so why stop @ $60...

Extremely unlikely production has gone up and there has been no suggestion of that, but yes extra revenues from the higher oil price, it now needs to go higher!!

What we really need is a resources upgrade...... Still not convinced we need refinancing, although it seems like a given thats its happening...

Or rise to the placing price if it’s higher

Jimmy- I think you are misinterpreting- the FCA cannot agree to the current terms without due diligence. If the cannot agree to the current terms they would not need to do due diligence

Just gone through close to 6M shares. Lets hope whoever made that sale lives to regret their decision..... That could of been holding the market down.

£64K buy @ 9.3

Also worth considering that if you reread the RNS POO is mentioned several times as a contributing factor to Hurricanes problems. Because Hur is an oil producer, an increased Oil Price equates directly to cash in the bank, and this extra $200K a day over time surely help Huricanes liquidity condsiderably. If Saudi keep to its work and reduces oil production by 1M BOPD then the POO will probablay get and stay above $60 - that could mean to Hurrican an extra $200K a day for 4 months difference to when the RNS was sent out. Thats something like $24M which will pay for almost half of the sidetrack - so surely it makes a difference. Whether it is enough for them to buy back their bonds and save 50% I do not know.... But there must be some positive to come from so much revenue. If the company was trying to increase its SP (which it does not appear to be interested in doing) I would expect an RNS stating the difference $60 Oil will make to them over Q1 and how that will change things.

Surely all this extra money cannot make no different, so please Huricane can you tell us what difference it will make :)

Quote form Crystal Amber Website (although it has not been updated recently):

"In the second half of 2020, production is expected to continue from a single well at a range of 12,800 to 14,200 barrels per day. A number of remediation options are available to increase the EPS' production. However, in the current oil price environment and with a reduced production outlook, cash generation is expected to be insufficient to both fund additional well stock and to repay the bond. Nevertheless, as the convertible bond now trades at less than half its repayment value, there is currently an opportunity for Hurricane to utilise some of its $106 million cash to buy in some bonds in order to materially reduce its indebtedness."

https://www.crystalamber.com/about/majorholdings