Member Info for RodneyT

Why would BHP and NMM accept such a low number? They don't need the money.

Why Med? Please explain showing workings.

Stas, :-) ;-)!

Agree, Fort but we just have to take it in our stride and press on. I wasn't at all comfortable with the JCC sale/deal due to many things including the obvious scope for a conflict of interest. That said, I think we have to rally behind DV now based on his recent performance and his certain awareness of the (in my view) valid concerns above.

Solgold first started drilling TAM back in Dec 2020. The 2024 PFS outlines TAM as an open-pittable resource and referred to using open pit waste for the TSF construction. With this history, along with DV's recent remarks, it could be that, in the same way that certain milestones have been delayed/postponed in the past, future milestones might be achieved in a timely manner or even in advance.

Agree with you Fort. I think DV has made it perfectly clear to the market these last few days that he is a man in a hurry as is Solgold a company in a hurry. I think he reacted well to certain small shareholders who scolded him for whinging about the small shareholder cohort. He was told that he could change that. And I think he has made an excellent start doing that. TAM results sooner than folk think generally. That's my position.

Thanks PBOW,

To be clear and fair to SC and the company at the time, 2023 for the DFS was targeted for H2 2023 on 28 July 2022 in the BAU. This target was then postponed by the company on 22 November 2022 due to 'shifting capital cost dynamics' and other factors. I think it is reasonable to say that the company informed the market well in advance of the time at which the DFS was due to be published and likely as soon as it could. As such, I for one do not hold the delay against the company or SC.

Does anyone know whether the company has formally stated when this will be published, please? RC referred to H2 2025 in its recent report but I can't find this referred to in an RNS or similar. Thanks

B, that is absolutely not the case based on M&A deals done in this sector over the last 10 years as an example. Bidders don't care too much about current share price in a company like Solgold. They know they can't own the company for that. The value of the asset not the current market cap is the focus and deals are usually done between 0.8 and 1.1 of NAV. Towards the higher figure for Tier 1 assets largely de-risked. I am not saying any bid is coming soon. I do not know that. What I do know is the historic data on M &A in this sector.

Morning all, Seems like our current situation is merely a continuation of the HUR saga where the last concern we had was the reliability of Lancaster. In a way it is good that the main creditor is HMRC. How would it look if DCU holders are stiffed whilst HMRC get paid? 'Professional Fees'? Always concerning. The silos seem to be a reasonable defence although we will have to see what the complex structure of Prax actually is. Who will defend DCU holders if this ends up in court? Who will pay for that? As an aside, the UK has an energy crisis. Just back from Doha where they happily produce loads of LPG which we buy and then mess around calling ourselves 'Green' and on target for the sinister Net Zero. All the while winding down our own oil and gas industry and destroying the well paid jobs that go with it. All those taxpayers no longer paying tax on those top level salaries. Lancaster production seems to be key. Anything that disturbs that will likely be mortal for us. So long as it is attractive to keep producing, that has value and that it good for us. All things considered, it doesn't look too bad although, of course, it is a nightmare. But what's new? Old-timers here know how shocking things were in the Maris years. I wonder what Tony Buckingham is thinking about on all this? What about the Dutch pension fund? I have the name on my laptop but not here. Are they still holding DCUs? They had s large number. Overall, this note and the ones yesterday are my overall view. I suppose who defends DCU interests and who pays for that re Court action is the most interesting topic we could explore now? Have a good day all.

In conclusion, if State Oil Limited’s insolvency remains contained at the parent level, DCU payments

should continue as normal, funded by Lancaster’s ongoing production. The legal structure and ringfencing

of Prax’s upstream business provide a layer of protection – the DCUs are an obligation of a

separate company that is currently solvent and operating. Parent company receivership has no legal

power to cancel those obligations, though it can lead to a sale of the business. DCU holders’ main

vulnerabilities are if the upstream business itself falters or if a quick sale yields less value than

anticipated. In the event of a sale, DCU holders are contractually entitled to their share of the proceeds,

giving them a seat at the table (indirectly) when the asset’s value is realized. And if Prax’s upstream unit

were to default or enter insolvency, DCU holders would resort to being creditors in that process, with no

special priority – a scenario they hope to avoid.

For now, Hurricane’s former shareholders can take some comfort that Lancaster’s cash flows are still

flowing in a protected channel to fund DCU payouts, and the structure of the Scheme gives them

legal tools (and a representative) to enforce their rights. Nonetheless, the situation remains fluid. It

serves as a reminder that when accepting deferred consideration tied to an acquirer’s future

performance, one is inherently trusting that acquirer’s financial health. In this case, the ring-fencing

under UK law means DCU holders are not automatically dragged down by the parent’s insolvency, but

they must remain vigilant and prepared to act if any cracks appear in Prax Upstream’s willingness or

ability to pay.

Sources:

Hurricane Energy Scheme of Arrangement Document (Part II – Explanatory Statement).

Hurricane Energy Recommended Acquisition RNS (16 March 2023).

Hurricane Energy Shareholder Q&A via LexisNexis (23 March 2023).

Investegate announcement, “Update on Matched Bargain Facility and DCUs” (8 June 2023).

Irwin Insolvency, “What Happens to Subsidiaries If a Parent Is Liquidated?” (UK corporate law

explainer).

Reuters News, “UK’s Prax Group files for insolvency” (30 June 2025).

Insider Media, “Oil refinery owner collapses into administration” (30 June 2025) .

LSE Hurricane Shareholder Forum posts (July 2025) summarizing DCU terms under distress.

Prax-Hurricane-Scheme-Document.pdf

file://file-VHZ4iSkB2uHacPb8qKCn7H

Almost 200 jobs at risk as Lindsey Oil Refinery owner collapses into administration | Insider

Media

https://www.insidermedia.com/news/national/almost-200-jobs-at-risk-as-oil-refinery-owner-collapses-into-administration

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Hurricane’s directors took comfort in Prax’s status as part of a large integrated

group and the legal obligations in place. But Prax’s “house of cards” finances (as media later

described) have indeed made the DCUs riskier.

On the positive side, Prax’s upstream subsidiary remains operational, ring-fenced, and potentially

attractive to other industry players. The UK Government and administrators have strong incentives

to keep the Lancaster field producing (to preserve jobs and energy supply, and avoid a sudden

decommissioning liability). News reports suggest the government even facilitated continued operations

at the refinery and related assets during the insolvency, indicating a controlled process rather than a

chaotic collapse. For the upstream unit, administrators signaled “all options” including a sale as a going

concern . There may be interested buyers for a North Sea producer, especially if tax synergies

(Hurricane’s hefty tax losses) are in play. A competent buyer could ensure Lancaster’s remaining life is

managed efficiently and DCU payouts continue or accelerate via deal terms.

From a UK insolvency law perspective, DCU holders should monitor any insolvency filings or notices

involving the Prax upstream entities. If an administrator or receiver is ever appointed over Prax

Exploration & Production PLC (or the Hurricane entities), DCU holders would likely need to file claims

and possibly organize as a creditor group. However, as of now, those entities are not in administration –

they are effectively “ring-fenced” in the sense of being left outside the parent’s insolvency . This

is a relatively good outcome for DCU holders given the circumstances, because it means their rights are

still intact and being honored in full so far.

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(because

£129.1m is 17.5% of that). Given Lancaster’s declining reserves and the distressed context, such a

valuation may be unrealistic. Thus, DCU holders have a vested interest in the administrators securing a

fair price for the asset. Fortunately, administrators are incentivized to get the best price possible for

creditors, which aligns with DCU holders’ interests to some extent. If a sale occurs, DCU holders should

expect a payout within ~3 months after the half-year in which the sale closes (per the DCU payment

schedule).

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Recourse if DCU Payments Are Cut or Stop: In the event DCU payments are delayed, reduced, or

defaulted on, DCU holders do have some avenues: - Contractual Lawsuit: As noted, they can sue Prax

E&P for any unpaid amounts as a debt. A successful judgment could potentially be enforced against the

company’s assets (for example, by seizing bank accounts) unless an administrator is appointed in the

interim. - Winding-Up Petition: Non-payment of a statutory demand above £750 can justify a windingup

petition. The threat of this could force the issue, although if the goal is to keep the company running

to generate DCU value, winding it up might be counterproductive. - Invoke the DCU Representative:

The appointed DCU Representative can act on behalf of all holders, potentially negotiating or mediating

with Prax or, if needed, representing their interests in court or in an insolvency committee. This is a

form of collective action mechanism. - Rely on Scheme/Takeover Protections: In truth, most legal

protections were front-loaded (e.g. the State Oil parent guarantee, which is now ineffective). There is no

regulatory body (such as the Takeover Panel) actively supervising post-takeover performance of a

private buyer. The Panel required disclosure of DCU risk but will not enforce payments. DCU holders

essentially must rely on general creditor rights now.

If Prax’s upstream unit stays solvent and simply delays payment, one would expect it to eventually catch

up (perhaps after clarifying any ambiguities in net revenue calculation). If the unit cannot pay

(insolvency), then recourse shifts to the insolvency process outcomes discussed above. It’s worth noting

that DCU holders’ situation is not unique – many takeover deals with earn-outs or contingent value

rights carry this credit risk. Hurricane’s board acknowledged this in recommending the deal: they

highlighted both the upside potential of the DCUs and the risk that “if, for any reason, these payment

obligations were unable to be satisfied by Prax and/or Hurricane [the subsidiary], shareholders will be at risk”.

Commentary and Outlook

The predicament Hurricane’s shareholders now face – relying on a financially distressed buyer to

deliver future payments – underscores the inherent risk they accepted with the DCU structure. At the

time of the Scheme, Hurricane’s directors took comfort in Prax’s status as part of a large inte

Sale of the Upstream Business: The most likely development is that the Lancaster field and associated

Hurricane assets will be sold to a new owner. Such a sale could be structured either as a sale of the

shares of the Prax upstream subsidiary or as an asset sale of the field. The DCU Deed Poll anticipated

this scenario and protects DCU holders’ interests in the event of a sale. According to the DCU

terms, if Hurricane’s assets or the upstream company are sold off, the DCU holders are entitled to

17.5% of the net proceeds of any such sale, just as they would receive 17.5% of operating revenues. In

effect, a sale is treated as a monetization event for which DCU holders get their proportionate share

(payable on the same biannual schedule after the sale completes). This prevents Prax or its

administrators from defeating the DCU by simply selling the field – the value realized must be shared.

Specifically, any net sale proceeds (after transaction costs or perhaps after settling secured debts

associated with the asset) would fall under “Net Revenues” for DCU calculation purposes. The Scheme

documentation indicated DCU holders benefit from 17.5% of “any acquisition made by the Hurricane

Group”, and by the same logic, disposition of assets is covered. Investor commentary confirms: “if the

Administrators look to sell…the DCUs will be entitled to 17.5% of the net proceeds of any sale of Prax

Upstream company/assets, payable [within] 3 months after the end of the half-year period in which the

proceeds are received”. This would be an accelerated payout of the DCU’s value. It would also be in

addition to any regular production payments due for prior periods.

For DCU holders, a sale could be a double-edged sword. On one hand, it might accelerate and crystallize

the remaining DCU value (potentially a welcome outcome if one is concerned about Prax’s stability). On

the other hand, the amount they receive depends on the sale price achieved for the Lancaster field

or company. If the asset is sold for a high price, DCU holders get 17.5% of that – which could even reach

the 6.48p cap. But if the sale is at a bargain price (e.g. in a fire-sale scenario due to the parent’s

pressure), the 17.5% share might be relatively small, possibly leaving DCU holders with less than the

hoped-for maximum. For context, investors have estimated that to deliver the full remaining ~6.48p via

a one-time sale, the upstream business would need to fetch on the order of £370+ million

2. Subsidiary Insolvency or Sale: If the situation deteriorated such that Prax’s upstream business

itself became insolvent (for example, if oil prices crashed or a major operational problem arose, or if

the administrators put it into insolvency), DCU holders would formally become unsecured creditors in

that insolvency. They would file claims for any DCU payments due and for the remaining expected

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payments (perhaps claiming the maximum cap less what’s been paid, as damages for breach of the

DCU contract). In an administration, however, future contingent claims can be tricky – the administrator

might only pay out based on actual realized proceeds. Ultimately, in a liquidation scenario, DCU holders

would likely rank alongside other unsecured creditors (such as trade creditors or the bondholder

financing used to acquire Hurricane, if any). There is no evidence of any security interest securing the

DCUs, so they do not have priority. Recovery in that scenario would depend on the remaining assets

(the Lancaster field value, any cash) after higher-ranking creditors (like any secured lenders or tax

authorities). This is obviously a worst-case outcome for DCU holders, as contingent value rights often

recover little in bankruptcy if the underlying business fails.

It is important to stress that currently Prax’s upstream unit is not insolvent. By all accounts it is cashgenerative

(Lancaster oil is still being sold at profitable prices), and the only impetus for a sale or windup

is the parent’s need for cash. The administrators have pointedly not placed the upstream subsidiary

into administration – instead they are keeping it running to maximize its going-concern value. This

bodes well for DCU holders in the near term, as it means the company will likely continue to pay DCUs

during the sale process.

Were to miss a scheduled DCU

payment or attempt to pay less than the proper amount despite continuing operations, DCU holders

have contractual enforcement rights. The DCU Deed Poll is enforceable by legal action – holders

(potentially represented collectively by the DCU Representative) could sue Prax for breach of contract to

recover the owed amounts. The English courts could order specific performance or, more likely, a

judgment for the unpaid sum. Given that DCU amounts are calculable from objective production data, it

would be a straightforward debt claim. There is no built-in penalty or interest on late DCU payments, so

the incentive for timely payment is mainly to avoid default judgment or insolvency triggers. If a

payment is missed, DCU holders might also consider issuing a statutory demand (a formal demand for

payment) which, if unsatisfied, can lead to a winding-up petition against the subsidiary. The threat of

insolvency proceedings can be a powerful tool – directors would want to avoid the company being

forced into administration or liquidation due to non-payment of DCUs. Essentially, DCU holders are in

the position of unsecured creditors who can use all normal creditor remedies.

As a first step, the DCU Representative would likely engage with Prax to sort out any issues. The DCU

terms provide for an Independent Accountant to resolve disputes about calculations, so if the

disagreement was about the amount (e.g. what costs are deductible), that mechanism could be

invoked. In a case of outright non-payment, that is less a “dispute” than a default – at which point legal

proceedings or negotiations would ensue. DCU holders are somewhat protected by the transparency of

production figures: since liftings and oil prices are public, any significant shortfall would be obvious. It’s

worth noting that thus far Prax has made the DCU payments on time (previous biannual payments

were reported by holders to arrive on schedule), indicating Prax’s upstream management has been

meeting its obligations up to the point of the parent’s collapse.

Remains a legal document, a claim on it would just rank alongside other unsecured claims in

State Oil’s administration (likely with minimal recovery). Practically, DCU holders must look to the

subsidiary itself for payment, not the parent or its guarantee.

In summary, State Oil’s receivership does not extinguish the DCU obligations. The Prax upstream

subsidiary is still on the hook to pay 17.5% of Lancaster’s revenues to DCU holders. The key legal effect

of the parent’s insolvency is that control of the subsidiary is now in the hands of insolvency practitioners

aiming to maximize value for creditors – which likely means the upstream business will be sold or

otherwise monetized. Until or unless the upstream unit itself enters an insolvency proceeding, it is

expected to continue operating normally and paying its debts (including DCUs). This aligns with the

statement from a Hurricane forum observer: “DCUs will only change into unsecured creditors in the event

that Prax Upstream also falls into insolvency. As yet there is no sign of that.” In fact, keeping the upstream

subsidiary out of insolvency preserves its value for a potential buyer. Any value the upstream generates

(after paying its own obligations) ultimately belongs to the parent’s administrators as shareholders, but

the subsidiary must honor its own liabilities first.

Protections and Recourse for DCU Holders in Adverse Scenarios

Given the above, DCU holders face two main risk scenarios: (1) Delayed or defaulted payments while

the subsidiary is still operating, and (2) Insolvency or sale of the subsidiary. We consider the

implications and protections in each case:

1. Non-Payment or Delay (While Solvent): If Prax’s upstream unit

DCU holders have rights to a portion of such proceeds. In

short, the administrators cannot simply raid the subsidiary’s coffers to pay parent creditors

without regard for the subsidiary’s creditors (including DCU holders). Their realistic option is to

sell the subsidiary or restructure the group.

State Oil’s Guarantee: One wrinkle is that State Oil had provided a parent company guarantee

(PCG) at the time of acquisition. Upon Scheme completion, State Oil guaranteed “all monies,

debts and liabilities” of Hurricane and its subsidiary (Hurricane GLA), except for the special

pre-acquisition dividends. This PCG was likely intended to assure Hurricane’s board of Prax’s

backing for the operating business (and possibly decommissioning obligations). In theory, if

Hurricane (or its new owner Prax E&P) could not pay the DCUs, State Oil’s guarantee might have

been called. Unfortunately, with State Oil itself now insolvent, this guarantee offers little

comfort – State Oil is under administration and unable to satisfy such claims. The PCG is

effectively only as good as the parent’s solvency, which has evaporated. So while the guarantee

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Parent Company Insolvency: Effects on Subsidiary Obligations

Separate Legal Entities: Under UK corporate law, a company and its shareholders (even 100%

shareholders) are distinct persons. The insolvency of State Oil Limited (the parent) does not erase or

automatically stay the obligations of Prax Exploration & Production PLC or Hurricane Energy Ltd

(the subsidiaries). Each company is responsible for its own debts. As a general rule, “if a parent

company were to be liquidated, there should be no effect on the subsidiary’s operations” – the subsidiary can

legally continue trading and paying its creditors despite the parent’s woes. Likewise, creditors of the

parent cannot pursue the subsidiary’s assets to satisfy parent-level debts. In practice, this means

the DCU obligations (which sit with Prax’s upstream unit) remain in force despite State Oil’s

administration. The upstream subsidiary still owes DCU holders the agreed payments and must honor

those so long as it is solvent and operating. The parent’s inability to meet its own debts doesn’t void the

DCU Deed Poll.

However, in practice the parent’s insolvency can indirectly impact the subsidiary in a few ways:

Control by Administrators: When State Oil went into administration, the administrators

effectively took control of State Oil’s assets – and a subsidiary is viewed as an asset of the

parent (the parent owns the shares of the sub). The administrators now control State Oil’s

shareholding in Prax E&P (and Hurricane). They can exercise the parent’s rights as shareholder,

which may include replacing directors or instructing the subsidiary to take certain actions that

maximize value for creditors. Notably, administrators have a duty to act in the best interest of

creditors of the parent. In this case, they have indicated they will consider a sale of the

upstream subsidiary to raise funds . They stated: “We will be considering all options for the

group, including the prospect of a sale of the group’s upstream business… all of which remain outside

of insolvency” . A sale process is thus a likely outcome of the parent’s receivership.

Potential Asset Sales or Dividends: Short of selling the entire subsidiary, an insolvent parent

(or its administrator) might try to extract value by making the subsidiary pay up to the parent

(for instance, via inter-company dividends or asset sales). U.K. law imposes important

constraints here. A solvent subsidiary may pay dividends to a parent only out of distributable

profits, and directors cannot lawfully declare dividends or transfers that render the sub unable

to meet its own debts (that would be a breach of duty and potentially a fraudulent transfer if

insolvency ensued). Given that the DCU is a known liability, Prax’s directors would risk legal

liability if they siphoned off cash and left the DCU claims unpaid. Additionally, any asset sale by

the subsidiary would presumably have to be at fair v

Tied to these revenues, ongoing production directly

translates to ongoing DCU accruals. Every barrel sold contributes to the Net Revenue pool of which

17.5% goes to DCU holders. If Lancaster had ceased production or been forced offline, DCU payments

would dry up; but at present the field’s “operational health” appears intact. The asset is a declining

reserve, yet still yielding cash – indeed, Prax made three semi-annual DCU payments to date (in

September 2023, March 2024, and September 2024) as oil was produced and sold, and the next

payment for H1 2025 is anticipated around 30 September 2025 assuming normal operations. As one

industry commentary noted, “the next DCU payment is still (currently) due on 30th September [2025]…

because Prax Upstream is not (currently) included in the administration process”. In short, so long as

Lancaster keeps pumping and the Prax upstream subsidiary remains outside insolvency, DCU

holders should continue receiving their scheduled payments.

It’s important to highlight that DCU holders are not directly concerned with Prax’s profit or cash needs

elsewhere – their entitlement is calculated on gross field revenue. For example, even if Prax’s refining

business was burning cash (which it was), that didn’t reduce the DCU share of Lancaster sales. Likewise,

inflation in operating costs doesn’t dilute DCU payouts: the DCU formula “is not impacted” by higher

costs, since it’s based on top-line revenue. This design protected DCU holders from the broader Prax

Group’s operational troubles. Thus, continued operational performance at Lancaster is the key

driver for uninterrupted DCU payments, largely insulated from the refinery’s collapse other than

through the risk of corporate upheaval.

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