Confidence in HUR3 Apr 2020 13:12
"As part of this assessment, the directors considered a number of scenarios which included downside sensitivities in relation to production rates, operational uptime, oil price, operational costs and foreign exchange rates. Following the sharp decline in oil prices in March 2020, the base case oil prices utilised for the going concern assessment were $30 per barrel until the end of the third quarter of 2020, rising to $40 per barrel in the fourth quarter, and $50 per barrel flat from January 2021 onwards. A price scenario was also considered using a flat $30 per barrel assumption through the coming 12 months. Aggregated downside scenarios were also considered, taking into consideration mitigating actions within management's control.
The directors note that should oil prices fall below those assumed above, or productions rates fall below the level forecast, the Group would be able to take mitigating action by postponing or cancelling certain capital projects which are currently forecast but not yet sanctioned. In addition, the directors note the emerging risk of COVID-19 at the time of reaching their conclusion on going concern, where the impacts on global oil demand, Lancaster facility uptime and wider society are currently unclear. However, given the large level of cash resources held by the Group, and limited levels of committed expenditure in the coming 12 months, the directors consider that Hurricane is well placed to withstand a severe downside scenario which could be caused by COVID-19.
Following this review, the directors are satisfied that, taking into consideration reasonably foreseeable downside sensitivities, the Group has adequate resources to continue to operate and meet is liabilities as they fall due for the foreseeable future, a period considered to be at least 12 months from this financial information. For this reason, they continue to adopt the going concern basis for preparing the financial information.
The longer-term prospects of the Group are driven by its strategy and business model whilst factoring in the Group's principal risks and uncertainties".
From the full year results. Dated 19th March 2020
Covid19 will go away, one way or the other, in the short to medium term. The world economies will reignite and demand will increase, and all this is not news. Why should I not buy into HUR at 12.20p? It's nuts. I believe HUR has all necessary to be a successful oil exploration; they have reserves, they have the cash flow and they are in the UK and have a relative low cost per barrel, circa $21.6.
I am in for the long term since yesterday at 12.20p
Good luck all holders.
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