On a sale date we will get 6.02p:
5.19p paid by Hurricane from own resources plus 0.83p Cash Consideration paid by Prax.
After sale date we will get 17.50% net revenue from P6 well:
2023 - 0.27p in September
2024 - 1.21p split in two
2025 - 1.13p split in two
2026 - 0.35p split in two
After sale date Prax will keep 82.50% of net revenue from P6.
There is also a promise of any other future net revenues generated by end of 2026.
Great deal for Prax. Virtually no risk.
From: Hurricane Communications
Dear Sir
Thank you very much for your email and for your questions.
I have copied your questions below and provided answers to each:
1) What is the total to be received in 2023 from Prax and Hurricane? Is it 6.02p per share (5.19+0.83) or 6.29p per share? Both numbers are in your Presentation.
Answer:
The 6.02p per share is made up of the Transaction and Supplementary dividends (5.19p) plus the Cash Consideration (0.83p). The additional 0.27p per share relates to an estimate of the first DCU payment that will be received covering 17.5% of any Net Revenue that is generated in the period 1 March – 30 June 2023. This effectively relates to the revenue from the anticipated April 2023 lifting. The additional 0.27p for this DCU payment is not guaranteed as it is dependent on three factors, being (i) the April lifting is not unexpectedly delayed beyond 30 June 2023; (ii) the price achieved for the lifting; and (iii) the actual amount of oil sold.
2) Please can you confirm when (month) in 2024, 2025 and 2026 Prax will pay cash to the DCU holders?
Answer:
The DCU Cash Amounts will be paid in March and September each year. The first payment will be made in September 2023 (covering the initial period to 30 June 2023), and the last payment will be made in March 2027 (covering the 6 month period ending 31 December 2026). The exception to this is if the cap on the DCU is reached earlier, in which case the DCU payments will cease when the cap is reached.
You mean 0.20p will be added later this year? You shure about that?
Prax offer without 17.5% from future net revenue is no different from leaving Hur with P6 only.
Simpes. We are giving Hurricane to Prax because Hurricane's board is not able to find any other way to expand as Hurricane brand. Then we are being told if not this deal then we will push it to wind down route. Scary tactics.
Re:1. Both are mentioned. 6.02 and 6.29
Illustrative Lancaster returns to Hurricane Shareholders as a standalone independent business compared to the outcome pursuant to the Acquisition under the same production assumptions are presented below:
Returns to Shareholders 2023 2024 2025 2026 2027 Total
------------------------- ------ ------ ------ ------ -------- ------
Hurricane Standalone 3.32p 0.83p 2.07p 1.94p 0.00p 8.17p
Acquisition (through
Special Dividends
and DCUs) 6.29p 1.21p 1.13p 0.35p 0.00p 8.98p
Cumulative Variance
( Acquisition vs
Standalone) +90% +81% +39% +10% +10% +10%
Holders of Deferred Consideration Units will benefit from 17.5% of all other Net Revenues, including from any acquisitions made by the Hurricane Group, from 1 March 2023 until 31 December 2026 meaning the Acquisition, assuming full value is delivered by the Deferred Consideration Units and the declaration and payment of the Supplementary Dividend in full will deliver Hurricane Shareholders 12.50 pence per share.
In an orderly wind down of the business, Hurricane expects to pay for the ongoing costs of the business and the decommissioning of the wells and facilities, and return all of Hurricane's remaining cash and cash from operations to Hurricane Shareholders, with the last payment expected to be in 2026. In aggregate, the Special Dividends and Cash Consideration under the Acquisition total 6.02 pence per share, which, together with the 17.5% share of future Net Revenues directly from the Lancaster field, is greater than the sums that the Directors expect to be able to return to shareholders in an orderly wind down of the business, assuming that the oil price is US$80/bbl from now until COP.
Re:5. We have to know before voting how to deal practically with DCUs. How to sell them on MBF if they will be linked with tour brokerage account?
Emailed Hurricane on Thursday. Awaiting reply.
Dear Sirs,
I have a few questions regarding DCUs.
1. What is the total to be received in 2023 from Prax and Hurricane. Is it 6.02p per share (5.19+0.83) or 6.29p per share. Both numbers are in your Presentation.
2. Please can you confirm when (month) in 2024, 2025 and 2026 Prax will pay cash to the DCU holders?
3. In simple terms, should I apply for DCU Class 1 or this is not something designed to a private retail investors?
4. In simple terms, how I will be receiving cash from DCU, where that DCU will land, will this be added to my share trading account? I don't understand this part.
5. Then regarding the Matched Bargain Facility, have you selected the privider, website, what are the trading fees there for buy and sell DCUs?
Thank you,
14p deal, heard from a good source? :)
If anyone here still thinks that Prax pays us 40, 120 or 250m, have a read the RNS again or simply stop spamming.
Littlened,
I haven't seen your reply.
How much does Prax pay us?
Okay tell us, how much does Prax pay?
You never know who was behind it last time and why this time the buyer is taking over this company for nothing. It is a pure speculation from my side of course.
Prax is located a few miles away from Hurricane. Seems the lads know each others hence the deal. Now is the big question, was Prax one of the bondholders here?
That's interesting
Broom, I know you have added. I didn't have this chance as had no money to add that time. If it was 6.5p today, I would top up my account to add for sure, but now we are 1p higher and this is not as great as it used to be.
I still think however any buy under 8.50p can still be considered as a good decision if things go ahead of that wild plan.
To add.
If you sell and invest 7.50p in something that delivers 10% per annum then in 3 years you will have 10p.
No point selling unless you have some insider info from another company and you can buy there expecting quicker and higher return.
Vote No.
If we lose, not end of the world.
It actually does make more sense to vote NO and hope this deal is not approved.
However,
if it goes ahead, no point selling now at 7.50.
You will get 6p back and you can invest it in something that delivers 10% per annum so in 3 years you will have 8p from your 6. Plus you can get 6.50p from Prax, so 14.50p in total if you manage to find a company that pays 10% divi per annum and if Prax delivers.
It will be harder to turn 7.50p into 14.50p in my opinion.
I will only sell my shares here if we see 9p+
Agree. Perhaps if I had no shares I would buy some while they are under 8p. Funds see Hurricane attractive up to 9p as it will give them 3.5p back within 1-3 years max. This is more attractive than holding money in the bank.
I strongly believe that if shareholders were not selling now, the sp would increase to 8+.
In the US we would be 1billion mcap with this revenue and a list of projects in the pipeline. Of course we are not in the US and we have a BoD not capable to think outside the box
Wondering what are the trading fees on the MBF. The DCU will have a low balue for many and if the MBF fee is high then it would not make any sense to trade them.