Member Info for RodneyT

There are few certainties Kooba, only probabilties. The probabilies at HUR based on the figures extracted from the company's reports are that reserves are likely to be as good or better than those set out - this is what has occured in recent years (recall my reference to 0.3m and 6.6m). Assuming a break down halfway once 3.3 million barrels have been extracted and the well abandoned forever, this chain of events would bring around £135 million additional based on S80 a barrel, $30 cost per barrel and accounting for net free cash at bank of S141.1 million. All based on £1 = S1.22. This is quite a sombre scetch even by HurricaneWorld standards and estimates ca £250m halfway. Goldman Sachs revised their 2023 and first half 2024 oil price forecast down from $100 to $94 and $97 earlier this week.

Fully understand your position Tony. My view comes from the underlying value of the assets and what the proposal says they will be sold for (at very best). If things stay broadly as they are and the pump breaks down half way through to August 2025 and can't be fixed, have a look at the cash at bank we would have at that stage. It is much more than the maximum offer now. Also, look at the history of sequential under projecting and over production. Again, I do see your point and respect it.

An extract from a prvious posts showing an example from Hurricane's own reports and data. My chief query is the low (maximum) sale price . Concerning pumps, with 2P reserves at £432 million, either a sigificant amount of that is lifted or it remains in place. Supposing £200 million of oil remains and the pump fails. Would Hurricane be able to have the pump repaired or replaced?
2P and 2C figures declared by Hurricane Energy:
31 December 2020 2P 7.1 million barrels 2C 34.7 million barrels
31 December 2021 2P 5.8 million barrels 2C 35.4 million barrels
31 December 2022 2P 6.6 million barrels 2C 31.6 million barrels
Actual production in 2021 was 3.7 million barrels. 2022 production was 3.1 million barrels. Put another way, based on data and information provided by Hurricane Energy, 2P was 7.1 million barrels as at 31 December 2020. From 31 December 2020 to 31 December 2022 6.8 million barrels were produced. Based on this, we would expect 2P to be approximately 0.3 million barrels. The figure provided by Hurricane Energy as at 31 December 2022 was 6.6 million barrels. Why is the figure circa 20 times higher?

The proposed sale price of Hurricane can be no more than £249 million and could be as low as £82.7 million based on the 16 March document. Page 6 of the document shows free cash of $ 140.1 million and $ 60.7 million of restricted funds so $200.8 million as at 28 February 2023. This amounts to a total of around £164.6 million based on £1 = $1.22.
Page 21 shows 2P reserves (the best estimate of reserves – page 61) of 6.6 million barrels. Based on $ 80 per barrel (page 6) and production to August 2025, this amounts to around $ 528 million or £432 million projected revenue over the next 30 months.
Page 20 refers to up to $ 370 million of accrued tax losses remaining unused in an orderly wind down of the business ‘and thus will not provide any benefit to Hurricane Shareholders’. These accrued losses might clearly have a value to a buyer such as Prax who indeed could eventually use all the $370 million of losses to their benefit!
2C (best estimate of contingent resources) are shown as 31.6 million barrels on page 22. At S 80 per barrel this is S 2.52 billion or £2.06 billion.
Maximum sale proceeds are £249 million. Setting aside restricted funds and the value of $ 370 million of accrued losses (i.e. valuing these as zero for the purpose of this comparison) the value of reserves (£432 million) plus contingent resources (£2.06 billion) plus cash at bank (£ 114.8 million) totals ca £2.606 billion i.e. just over 10 times more than the maximum sale proceeds. In other words, the company is selling its assets based on assumptions derived the Company’s 16 March 2023 document at about 10p in the pound. One would expect a figure somewhere in between fair estimated value and nil. But 10% or so of projected value? Why is the Board recommending this and what is its motive to do so? It is easy to sell a £20 note for £10 especially if you are the keeper of the £20 note rather than the owner. You make £10!
Finally, page 18 5.2 covers the North Sea Transition Authority and Hurricane’s inability to obtain support to develop Lancaster. Is it possible that the NSTA were not happy with some aspect of Hurricane or the data it provided? Are there any public records of those discussions available for inspection? Through a FOIA request perhaps?

I shall have a look at the most recent report again tomorrow then post a few words with references from the report. I'll give lower, median and upper estimates of value then convert to 3 share prices. Goodnight in the meantime.

I cannot comment on tax as I too am not a tax expert. Projected production and actual production year after year along with the use of huge discount rates when calculating the NPV of known reserves look startling to a layperson. Persistently way off but way off the same way each time.

Production and the projected value of that production are different topics and it has been the projected production and 2p reserves that have been consistently understated by a highly significant level as I have shown with clear reference to Company documents. Also, why use and rely on an NPV of 10% of the 2p identified? I am sure this approach can be presented as 'prudent' but why is it that the repeated production and reserve outperformance has not been a feature of company announcements since 2020 until now?

million barrels as at 31 December 2022. The 2C figure provided by Hurricane Energy as at 31 December 2022 was 31.6 million barrels. |At USD70 per barrel, 6.8 million barrels of oil has an estimated value of USD 476 million. Why is performance almost always so much better than estimated at Hurricane Energy and why might this be relevant now? Might those 2C Resources be much more accessible (and valuable) in future?

The Half Yearly Report published by Hurricane Energy on 11 September 2020 included preliminary findings of the Technical Review announced on 8 June 2020. A ‘strengthened Hurricane sub-surface team’ performed a comprehensive reassessment of the Lancaster field.
The Technical Review was led by Beverley Smith who, according to her LinkedIn page, was a Non-Executive Director of Hurricane Energy between December 2019 and June 2020 followed by Interim CEO between June 2020 and September 2020 then Non-Executive Director(part-time) between September 2020 and 2021. It is not clear who the other members of the ‘strengthened Hurricane sub-surface team’ were.
The figures referred to below are derived from the CPR dated 14 April 2022, the CPR dated 7 April 2021, the Acquisition document issued on 16 March 2023 the ERCE CPR published in April 2021 (available on the Hurricane Energy website) and the Half Yearly report referred to above.
Definitions (contained within the above documents)
2P – Denotes the best estimate of reserves. The sum of Proved and Probable Reserves. (Defined further on page 61 of Acquisition Document referred to above.)
2C – Denotes best estimate of Contingent Resources. Page 61 defines Contingent Resources as ‘those quantities of petroleum estimated as of a given date to be potentially recoverable from known accumulations by application of development projects but which are not currently considered to be commercially recoverable owing to one or more contingencies.’
The covering letter accompanying the ERCE CPR dated 23 April 2021 states, inter alia, ‘In accordance with your instructions, ERC Equipoise Ltd (ERCE) has prepared an independent assessment of the hydrocarbon Reserves, Contingent Resources and certain Prospective Resources attributable to Hurricane Energy plc (Hurricane) within licences held by Hurricane in the West of Shetland area, offshore United Kingdom. The effective date (Effective Date) of this report is 31 December 2020. For the preparation of this report ERCE was provided with data and information by Hurricane up to 31 December 2020.’
2P and 2C figures declared by Hurricane Energy:
31 December 2020 2P 7.1 million barrels 2C 34.7 million barrels
31 December 2021 2P 5.8 million barrels 2C 35.4 million barrels
31 December 2022 2P 6.6 million barrels 2C 31.6 million barrels
Actual production in 2021 was 3.7 million barrels. 2022 production was 3.1 million barrels. Put another way, based on data and information provided by Hurricane Energy, 2P was 7.1 million barrels as at 31 December 2020. From 31 December 2020 to 31 December 2022 6.8 million barrels were produced. Based on this, we would expect 2P to be approximately 0.3 million barrels. The figure provided by Hurricane Energy as at 31 December 2022 was 6.6 million barrels. Why is the figure circa 20 times higher? The 2C figure as at 31 December 2020 was 34.7 million barrels. With 6.8 million barrels actually produced, we would expect 2C to be approximately 27.9

Have emailed you Senseman. All the best.

? It is so interesting how similar/familiar some of the key aspects are. A real sense of déjà vu. In case you are interested, their email addresses are Nathalie thomas@ft.com, greig.cameron@the times.co.uk mark.williamson@heraldandtimes.co.uk
3. An Extraordinary General Meeting. This can be called when at least 10% of the ordinary shares call for an EGM. The precise details of the EGM can be finalised later although I would have thought that certain parts of the one proposed by Crystal Amber recently should be a prerequisite i.e. CEO, CFO and others to resign. Do we have 10% ‘No’s’ on the spreadsheet already?
I shall not cover the basis of the offer here. I think the headline best case figure referred to in the press looks strangely optimistic; particularly given the perpetual gloominess of prospects by the Board of this company over the years followed by either excellent actual performance, better than expected on-going professional projections or both. (NB: I did notice the reference to ‘On Hurricane’s instruction’ on the ERCE Rule 29 letter on page 65.)

It has been intimated by the Board of this company over the last several years that Lancaster is in decline. With this in mind, please look at the bottom of page 21 and the top of page 22. There we see 2P
(‘the best estimate of reserves as per page 61) of 5.8 million barrels as at 31 December 2021. Produced volume in 2022 is shown on page 22 as 3.1 million barrels yet, due to a ‘change in assumptions in economic life’, 2P as at 31 December 2022 is shown as 6.6 million barrels. If the regression had been as previously estimated, the 2P figure would have been around 2.7 million barrels. The stated figure now is therefore around 244% more than expected. Given the company’s record in writing down reserves as in Q3 2020, how are we to interpret what is stated in this acquisition document?
Page 22 shows an economic limit of 1 February 2026 so an estimated 6.6 million barrels to be extracted over just under 3 years at an estimated price of $75 a barrel (Table 2 Page 66). That is $495 million. The report has given this estimated $495 million of oil over the next 36 months a present value of $65.1 million. Why is this figure over $430 million lower? Is it justified and how do such downbeat discount factors compare with actual oil production over the last few years and in particular with similar downbeat forecasts by the Board on the run up to the Mr Justice Zacaroli findings?
2C reserves (page 61 ‘best estimate of contigent resources) are a not inconsiderable 31.6 million barrels (page 22). The value of this at $75 per barrel is almost $2.4 billion.
Yet we are faced with giving up these assets for as low as £82.7 million? (page15).
We must take action now. It is not for us to say why Kerogen and Crystal Amber are voting as they are but we must press on and take whatever action we can to stop our assets being sold so cheaply
3 areas for action:
1. The more votes are cast, the less chance the Company has to succeed with this proposal. With just under 45% of the ordinary share capital to Vote ‘For’, a turnout rate of 60% will see this carried. A 90% turnout means they’ll need 67.5% of ordinary shares to vote ‘For’. That looks way more difficult based on the comments of so many investors (do we know of any who want this deal other than those mentioned in the report?). With a 90% turnout rate, they will need 22.5% of the ordinary shares to vote with them. We managed over 92% back in 2021 so we can do it again. We have to get the message out that all shareholders have to vote otherwise it is almost certain that a wonderful asset they already own will be sold off for a song.
2. Publicity. The Zacaroli case in 2021 attracted a lot of publicity in the press. Nathalie Thomas in the FT, Mark Williamson in The Herald Scotland and Greig Cameron in The Times (to name just a few) all reported on that High Court case. Indeed, the name of Messrs Maris and Chaffe will doubtless be familiar to them. Is it not worth updating them on what is going on here now?

It is very strange indeed given the history of oil reserve reporting by this Board that said reserves are deemed increasing at this late stage 9pages 21 and22). Look carefully at pages 64,65, 66 and 67. Inspect pages 21 and 22 then look at Mr Maris' presentation. The net present value of the oil the company projects will be extracted is only about 10% of its value given a POO of about where it is now. Also check those 3C reserves on page 22. We are talking about about USD 500 million of difference here. The estimate is way too conservative and does not relate well to the actual performance achieved over the last few years. It is incredible that the Board is recommending this proposal. I understand why they are but why CA and K are seemingly happy with it I have no idea. Just a few comments. Do your own research and please do not construe my remarks as advice.

Pause for thought please everyone. There are lots of things going on in this company at the moment. AM got us to finding and corroborating ca 1 billion barrels of oil. Let's allow him to speak. Patience folks, patience.

Good morning All,

The silence from Mitsui is deafening isn't it? Merry Christmas to you all.

Me too.

Thank you very much indeed Analytical.

Good afternoon everyone,

I don't think GLR has received the ca £5 million as yet. Is this correct and, if so, when might be the payment be expected? Thank you. R

Pleasure RK. Not sure. Depends on 1. Has he got any now? (Don't think so) 2. Whether he can keep going somehow in law until 1 December 2022. Also, there could have been some type of exit deal agreed with the Company to cover this. I wonder if any such agreement is available to shareholders? Clear as mud at the moment RK!

RK,
Please see page 18 of the 30 June papers which covers any options DC has/had on leaving the Company. If there are any, he has 90 days from departure (or more if the Board allows it) to exercise them. I am not sure if he has any or not. I am also not sure about the details of his departure. Will he still be able to vest those 4 million shares on 1 Dec 2022? Please refer to my earlier post and the references to Company documents.