Member Info for NewKOTB

Real value 'locked up' in HUR is tax losses and M&A cost for acquirer off-set against profit ... as such reduces the number of potential NS suitors ... ones that need to off-set WFT and reduce corporation too. Big players IOC / NOC's, ie Shell / BP etc would not be interested full stop .... also suitor would need cash as acquiring via loan may not be too clever given the way rates are moving atm. So limited options out there afaic. Crystal Amber want out, that much is clear and as major holders (28.9%) it would be easy to pass through any approach they feel is acceptable.

aimo & dyor

"8p p/s???!!! Is it you who’s put the bid in?.." LOL, If only !!!

Based on RNS statement of "with forecast year end net free cash[1] of c. $118 million..." plus £15boepd going NS rate for estimated YE 2P reserves and no debt, hence circa 8p/s .... don't forget CoP is only ~3 years away so big gamble for anyone wanting HUR ... Not much time to smooth out market variances on Brent, which is forecast to possibly drop to ~$45 barrel... Then you have UK gov changing tax rules every time wind changes direction. Plenty of headwinds, then again Brent could go ballistic, who knows !!!

aimo & dyor

Valuation of business is imo circa ~8p/s. Today's RNS is to hopefully draw in one or two more interested parties, otherwise it will be 7.7p/s imo. Crystal Amber want an exit route, this will give them that.

aimo & dyor

sasa,

For me, HUR wouldn't be a 'real M&A' deal, just a 'convenience' deal, a 'bit on the side', one that could help mitigate tax demands for next 3 years, after which Lancaster would stop producing anyhow and one that would enable LTIP's to be dished out against performance targets, nothing more.

We are still waiting for a 'real deal', one of significance, one that constitutes being advised to 'strongly' take no action in reference to recent KIST approach ..... HUR would not cut the mustard I'm afraid.

aimo & dyor

Yep, with $370m available in tax losses, this is extremely valuable for any NS producer given current tax climate, plus $118m in cash, plus ~4mmboe 2P, no decom either. So you could just suck her dry, shutdown ops, P&A and make a tidy profit whilst carrying over significant tax losses, zero debt too, that's without going after further reserves.... all for atm ~£169m. In addition too, M&A would also be a £169m cost on accounts so further aid in reducing our tax bill.

I estimate real valuation afaic for Hurricane would be in the region of ~£163m .... Given the offer by a secret potential buyer is circa ~£153m not much room for improvement in price afaic for HUR and their activist board member....Current Mcap of HUR as I type is ~£169m after ~24% rise today.

aimo & dyor

PP,

Its not a case of just not interested in black oil, per se, you need to look at the bigger picture..... something AA is pretty good at imo.

$370m in tax losses, are extremely valuable for any NS producer given current tax climate, plus $118m in cash, plus ~4mmboe 2P, no decom either. So you could just suck her dry, shutdown ops and make a tidy profit whilst carrying over significant tax losses, zero debt too, that's without going after further reserves.... all for atm ~£169m

Hurricane Energy plc

Formal Sale Process, Capital Return and Operational Update ..... hummmmm !!!!

"Over $370 million of value available in tax losses, as at 30 June 2022.." Current Mcap : $183m

https://www.lse.co.uk/rns/HUR/formal-sale-process-capital-return-ops-update-du19i7pykpoqmaj.html

Hurricane Energy plc

Formal Sale Process, Capital Return and Operational Update ..... hummmmm !!!!

https://www.lse.co.uk/rns/HUR/formal-sale-process-capital-return-ops-update-du19i7pykpoqmaj.html

"Fax machines to finally disappear..", Hooray .... no more dialing wrong number and being charged for the pleasure of !!!

Remember we opened at 426p the day prior to TB approach.

"quite easily push the price north of 400p..... "

That would be quite significant as we failed, only just, twice, to break back above 400p after that ridiculous drop from 514p to 337p on announcement of TB withdrawing.

I know it's a few days old now but interesting that same day Tullow & Capricorn deal was called off 'officially' last Friday, we fell 39p without any apparent reason other than rumored additional 5% wft and totally out of line with other NS players too. Could Tullow Oil or Capricorn now have its eyes set on SQZ and once again insider got to know about this ... dropped us and now buying.

https://www.lse.co.uk/rns/TLW/termination-of-proposed-combination-with-capricorn-8thmbosysjd1dgl.html

aimo & dyor

dick,

Yep, been watching that with interest .... luckily, our Board are not 'quite' as rogue as Reabold's ( I hope) but accountability and ensuring shareholders are given upmost priority at all times should be a given.

It would only take one or two significant activist holders to serve notice and it could make life very difficult for our board. Wouldn't take much for one or more of JPM / GS / Janus / Blackrock to rock the boat and throw a few board members overboard.

One particular reason given for this action that strikes a chord with me is "current strategic weaknesses.."

aimo & dyor

Everyone looking forward to yet another day of negative press ....

https://www.bbc.co.uk/news/business-63468313

"If companies don't produce to their best ability this government of the next one will nationalise.."

LOL Good Luck with that .... imagine for a moment, UK Gov running the industry !!!! It will end up sucking more cash than it generates by far and I'm talking £billions£ more every year, strikes, mass closures, mass redundancies etc etc .....

Name one nationalised industry that has done well..... game over for NS O&G if that's the case .... green energy to take over, not for another 20+ years at least imo.

aimo & dyor

Currently HMG are playing Russian Roulette with NS O&G industry, with statements like, "nothing is off the table".

On one hand they are now rumored to add 5% additional tax, on the other don't tell the industry what 'normal' levels are for NBP / WTI to fall to in order for WFT to no longer apply. Level playing field .... err NO !!

If they are looking to add an additional 5% making 70% tax & extending sunset clause by 3 years too, well, how many long term investment decisions will be made in an industry that appears of no value to UK Gov .... Tell you now, significantly less imo.

How many of the new licences will be acquired and taken into production should this occur, very little I would guess as simple economics would mean investment in overseas suddenly becomes a serious easy 'no brainer'. Most would have been looking to bring these and other licences into production soon after 31/12/2025 ensuring improved UK energy security ... now that would become 31/12/2028 .... Think we need a new word to replace 'univestable' if this becomes the case.

aimo & dyor

'MCap' fell >£106m on Friday alone...

Also, I feel NS will soon become a dog eat dog of producers to reduce their tax burden via M&A ... As QC mentioned on Friday, SQZ have 'not helped themselves' by sitting on an enormous cash hoard, now currently almost 70% of cash vs Mcap. Dynamic and conviction driven BoD's will be the alpha dog, puppies will fail to survive.

PS Sorry to all Puppy Lover's out there & all Donny Osmond fans too.

aimo & dyor

So if they extend by 5% ... what difference would that actually make to us .... maybe another £15m pa addition tax, very little in real terms, yet out SP fell >£106m on Friday alone.

If they want us to be taxed akin to Norway's (71.8%) tax system then more tax deductible allowances need to be added, ie Decom / R&D etc to match Norwegian producers benefits atm ..... aside from that, their revenue structure is fundamentally different to our as in cash flows into sovereign wealth fund.

On key difference between Norway's position on O&G industry and that of UK's, Norway's system ensures "The petroleum taxation system is intended to be neutral, so that an investment project that is profitable before tax is also profitable after tax.." Unlike UK's which is 'ell bent on ensuring NS becomes univestable.

AIMO & DYOR

Plus we lost 18 days production and expense of Rhum tree repair too.

"SQZ's market cap at end December would by my reckoning comprise cash (and equivs) equal to 195p...."

We have more than that already in cash !!!