Member Info for Slift

69% bondholders agreement.
6% of those that weren't included in the Ad-hoc group has to agree within next 3 weeks.

What are shareholders able to do? Here's Hurricane's response:
"Next Steps for Shareholders
Questions about the Restructuring should be directed to the Company by email to communications@hurricaneenergy.com. Further information regarding the Restructuring Plan will be announced in due course and, where appropriate, uploaded to the Company's website at www.hurricaneenergy.com. A copy of the practice statement letter will be uploaded to the Company's website at www.hurricaneenergy.com for information purposes only. The Restructuring does not require shareholder approval and no action is required to be taken by shareholders."

No, wouldn't be taken private. Or can't be.
Whilst 95% would be owned by bondholders, bondholders are also separate entities.
Each CB noteholder would receive 32.9m shares (or 0.083% of the company) as part of this restructure.

Usually, there is a benefit to shareholders in these type of restructure. However, there is none here - and that's what I find odd.
Also no shareholder approval.

I think it's down to CB covenants. Would be something like "CB have right to default company 12 months prior to maturity if company cannot prove it is able to pay back the bond".

"from $117m, you're reduced to $95.2m"
*$79.5m

"We had $156m in the bank end of December 2019, why do we have less now?"

- HUR bought c. $22-25m worth of long lead items for gas export/tie back early 2020.
- Cash has been moved to restricted for decom + FPSO termination fee. Current restricted cash = $46.7m

- Further cash will be moved to decom in May 2021 ($15.7m)
- Approx $13.1m will be used in Q3 2021 for P&A and decom of Lincoln
- Approx. $8.7m is restructuring costs, will be paid once this dilution/restructure is completed.

If you account for all this addition cost to current free cash, from $117m, you're reduced to $95.2m.

"THAT is a very good question. IF there should be a new attempt at raising equity (ie 'dilution'), have you ever seen a share-offer of such a sort priced at LESS than the ongoing SP, whatever it may be ? I certainly can't think of one. Correct me if I'm wrong."

Majority of the time, in a D4E, the dilution is typically done at a discount to ongoing SP.
In this case, the dilution is not done at a share price, but rather equity ownership - no matter the share price. I suppose this has been done this way due to the fact that the market cap and equity of this company has dropped to or below the value of debt being exchanged.

$50m of debt being swapped for 95% of equity, in a D4E swap.
So it effectively works out to be $50m for 39.84b shares = $0.00125 = c. 0.1p

"The company is far from 'broke' yet"
I'm not too sure about that.. The company's finances are provided in detail in the presentation.
A further $15.7m of free cash will be moved to restricted for decom.
Then considering the decom of Lincoln, etc. It really adds up.

I can say that there is rather something odd about this. HUR have said that the "no further activity" case remains the most likely outcome. So essentially, the dilution and restructure to me looks like a wealth transfer (to pay bondholders) from shareholders to bondholders, whilst extending the bond to further recover from the field.
So here's what it is:
1. Transfer all remaining equity(dilution) to bondholders to reduce debt by $50m and to extend the debt to end of 2024. Essentially paying bondholders with equity.
2. Continue producing as it is until uneconomical (beyond Jul 2022 which is when the current debt maturity is) to end of 2024.
3. Pay all proceeds to bondholders and decommission.

The company has not considered shareholders whatsoever. With this dilution, they are effectively transferring the shareholders equity to bondholders, for no FWP or no value for shareholders. Basically, a free transfer.

"Dickbat
Posted in: HUR
Posts: 966
Price: 3.30
No Opinion
RE: Interestingly, NOT A Single Word On Q1 Expected HUR CPR!02 Mar 2021 15:01
And where is shifty with his we are doomed diluted to death.!! Well it seems that’s not happening at the moment!! looking like it could be the long game of paying bondholders off with oil 60 and above this won’t be a problem as long as the well holds up there will be money leftover to drill next year.. not a bad plan rather than sacrifice shareholders to the slaughter and greed of bond holders.. We have some of the cards now in our favour let’s see what the CPR has to offer and maybe this gives them another seat at the negotiating table if it works for them... if not let’s pile up the cash pay them off and hope for better things next year..."

Are you doomed with dilution?
Is there another seat at the negotiating table?
Is cash piling up?

Yes, Dickbat is deluded.

Personally, carbon capture with amines is a very expensive process, which will increase OPEX cost of anything where carbon capture is implemented.
Amines are very expensive to both regenerate, and also to replace once they are degraded.

If you want to collect CO2, cheapest, most efficient and natural solution is just plant more trees..

Whilst renewable energies have become efficient and inexpensive in recent times, it cannot replace the requirement of oil in a world capacity for at least the next 100+ years, as much as the world, gov or environmentalists like.

Major oil companies are "seen" to be implementing green projects and CCS not because they are looking towards the future and profitability.. but rather to offset their carbon emissions from the more profitable fossil fuel activities.
i.e If they emit x tonnes of CO2 from fossil fuel activities, they can offset this by their carbon negative/climate positive from green/CCS activities to become "sustainable" and "net zero".

I don't see any problems with the current amount of debt ENQ has following refinance in Q3.
Following restructure, debt will be very manageable. This company will return to positive equity, not to mention increased production by Q3.

Personally feel this is still undervalued for what the company has done during a downturn of oil prices + COVID.
Now that oil price is at decent levels, the company will be producing meaningful cashflows to fund business strategy.
Significant value will be seen when oil price stabilises 75$/barrel, as this will allow ENQ to spend more CAPEX on drilling programmes to further boost production, reserves, balance sheet and reduce debt.

Other oil producers have been significantly affected by oil price and COVID, they'd focussed on cutting costs and going into survival mode. Meanwhile, Enquest has been preparing for a big rebound by keeping costs limited, acquisitions and maintaining production levels during such a big downturn to be able to benefit from the recovery that will take place in H2/21. All thanks to great direction by management, well done AB.

GLA.

Rip.

https://www.fitchratings.com/research/corporate-finance/fitch-downgrades-petrofac-to-bb-outlook-negative-29-04-2021

"When we start to put the pandemic behind us and return to a more normal economic growth, we will see a supply shortage with potential for continued price increases"

Stock levels are/are almost at 2019 levels following the significant increase in 2020 due to the pandemic.
Should demand pick up more over H2 2021 over the world, there may potentially be further net shortage of production even with OPEC+ relaxing cuts.
It takes time for development of fields and hence there could be a spike in oil prices. The lack of investment in the O&G sector is evident, especially in 2020-2021.

Even at todays' Brent prices, a lot of CAPEX is still being deferred due to the future uncertainty. So those that do invest now, will benefit significantly in the future. I hope Enquest spends more CAPEX to develop and increase production in 2022/2023.

With major oilers reporting great results with recovery of brent prices, looking forward to Q1 results here.

Expecting net debt to be down to less than $1200m with FCF generation for Q1 at approx. $80+m.
Operations update in 2 weeks?

$190m as in..

$230m bond - $127m cash = $103m
Equity at 30% premium = $86m (3.12p/share)

= $190m.

adoubleuk,

"Other than those who've may have got in hoping for a takeover, in at these rock-bottom prices"
Yeah true...
but.. let's say you're Linda Cook of Harbour Energy for the purpose of this demonstration (as I don't really see any other bidders).

- You have a field that operates next to Hurricane Energy. You have the infrastructure in place.
- You have been following Hurricane Energy since before first oil as it was supposedly the "biggest oil find in the North Sea".
- You have also been following Hurricane Energy in recent times - with the watercut, perched water, bubble point, resource/reserves downgrades, uncertainty, etc.
- You also know the situation Hurricane is in - CB due July 2022, cash in bank at $127m, with diminishing production and uncertainty regarding CB being repaid or finance agreement for FWP to be a going concern.

Now, what do you do?
1. Do you go in for the kill with a 30% premium takeover offer? for $190m.
2. Do you wait patiently until July 2022 for when Hurricane ceases operation to buy assets at administration for $60m?

market banter init

"Oils up nearly $1 since this morning why are we still stuck under 50p ?"

... Tullow has 77% of current production hedged with a ceiling at $66.6/barrel.
So I wonder why..

adoubleuk,
"for which of course funding will have to be found, either from current money in hand, or maybe another equity-raise."

Hurricane are left with two options:
1. Partial equitisation of bonds for extension, then fund FWP with cash in hand. This will wipe shareholders.
2. Secure new funding in the way of new investors (CB, Bank loan, etc.) that will COMPLETELY pay off the CB with the new investors taking on the risk for future returns. (Highly unlikely following what the BOD have achieved so far).

It's all as a result of the BOD being incompetent to secure a rig for 2021 to carry out the FWP.
I think it's game over for shareholders.

adoubleuk,

"Plus read the last sentence carefully. Which implies, (or almost states) that 'attributed reserves' will increase. Huh ?"
This is referring to conversion of 2C resources to 2P reserves with the implementation of P8 well.
Nothing out of the ordinary, that's what happens when the well is tied back, it accelerates production and hence converts 2C to 2P reserves.

Hello hello hello and his friends will soon have their holdings diluted to nothing.

Being naive is your problem, not mine.
Got nothing to lose, start knocking peoples.