Member Info for Slift

"The promise 2 years ago was 450kt and they had buyers chomping to get involved."
Wrong. No promises. Suggest you revisit what they had said.
I think 50kt sales during coronavirus where almost every other company is struggling is a success :)

No placing in 2021 (or at least not in the first Half) as they have enough cash.

If you think this is going down, please sell. Dump your shares bro :)

BigBear,

Good job, you got out at the highs.

There's also $20m GWA commitment well and $6m Lincoln P&A.

What about the flaring limits? AM contract? New ESG Guidelines to reduce CO2? AM upgrade costs? Gas Export? Spirit/Hurricane relationship?

Bondholders are at huge risk with current FWP.
Using $60m for sidetrack of well 7z does not provide value to the company or the assets, but rather provide cashflow.
If this fails, and bondholders take the company into admin, they wouldn't even be left with enough value in assets to cover costs.

I'd be VERY SURPRISED if HUR uses existing cash to fund the sidetrack well without any placement/financing arrangement.

As many have mentioned, a takeover by operators from nearby fields with an under utilised FPSO would be the best bet. Although I don't see many bidding more than say £150m (+/- 20m) for HUR in the current circumstances.
That will leave HUR shareholders with maybe 3-4p.

ALL IMO. GLA.

1) If we ignore all the history, and take things as they are, how would we value HUR as a going concern.
Will be a going concern with a $60m placing to sidetrack 7z.
10k bopd production required at $40 oil price.
Sidetrack of 7z will allow production from both 6 and 7z (if bubble point allows) - Maybe 16-18k bopd following sidetrack.

2) What is the expected commercial chance of success of tacking and injection on Lancaster.
This is the biggest risk - planned works may not be successful.
Sidetracking 7z is still focusing on Lancaster FB. No positive material impact (to reserves and hence value) to HUR's assets.
Water injection will provide a material impact - Sandstone reserves + extension of life of Lancaster FB (As at Interim Results, this material impact is already accounted for)

3) Could the bond holders extend the maturity, in return for more favourable equity conversion terms. This will be dependant on 1&2.
No from Lancaster point of view, as per 2, material impact of water injection is accounted for already on balance sheet.
But Lincoln could provide some leeway if tied-back into AM - but even so, very limited due to expected production/reserves from that Lincoln well.

4) After all that, can we place a value on the other fields.
CPR will value the resources of other fields. But unless drilled and resources converted to reserves, not much value can be placed here.

As per my previous post:
"Potential ways to increase TOTAL production to 25-30k bopd:
- Water injection at Lancaster to to continue producing from Well 6 (and 7 maybe if feasible?)
- Lincoln tie-back
- Another drill in Lancaster if well 7 can't be used (Cost needs to be factored in)

Also need to factor in the c. $20m GWA commitment well into finances and the $6m P&A for Lincoln if no tie-back.

For all the above, HUR had c. $85m free cash as at Oct 2020. So considering all that, even with 25-30k bopd at estimated oil prices, $230m bond payback in 2022 is not likely and also there are risks to the forward activity programme.
Shareholders will have to contribute to some aspect of the foward work programme (to manage risks for bondholders) AND the bond needs to be refinanced, IMO."

So bottom line, for HUR to be a going concern:
- Lincoln tie-back required
- Water injection required
- Another well to produce alongside 6 required (7z sidetrack)
- Placing to fund third well required
- Refinance of bonds required

ALL IMO.

John4242,

Totally understand the issue here and i've stated this before aswell.
Cashflow and expenses.

Yes, salaries are high, and I agree that COVID likely didn't have much impact.

But either way, the company will achieve 50kt sales this year.
I should also mention that cashflow from these sales will likely not be registered until the start of the crop seasons (April for majority of them).
If the above is true, it's possible that HMI receive a big chunk of the cash next year --> to the point where cashflow potentially becomes positive.

But if the company does make a profit and issues a dividend in the near future, would you still have a problem with their salaries?

I've also had some thoughts on how the board should communicate sales going forwards.
I'm thinking maybe they should provide RNS' to shareholders everytime the company secures 5kt or 10kt orders from new customers?
They had previously done this with agrocerrado, but since they now target customers with an internal sales team, I think any progress on achieving new clients/partnerships and significant sales should be communicated via an RNS. This will rebuild the trust and provide the confidence the shareholders need.
(Note: The company already provides *some details* on new partnerships/distributors/sales/events on social media)

What are peoples' thoughts and how would we get the board to implement the above?

Gino2903,

No target price.
Won't touch this at all with the current circumstances.

"minor placing"?

I'm thinking more like $60m placing to fund sidetrack
$30m (or more) debt for equity swap to restructure debt (would mean debt would stand at $200m)
Existing cash for Water Injection when restructure complete

Just IMO.

"It should be noted that there is a risk of dilution to existing shareholders from a possible restructuring and/or partial equitisation of the convertible bonds. Furthermore, if no agreement can be reached with the Company's stakeholders on additional investment, further development activity at Lancaster might not be possible. In such a scenario, Lancaster could continue to produce from existing wells before reaching the economic limit, the timing of which would depend on oil prices, actual production levels delivered and the level of cost savings achievable. The field may then be decommissioned, with potentially limited or no value returned to shareholders. Notwithstanding these risks, the Company will endeavour to secure the best possible outcome for all stakeholders."

Should state "significant dilution".
Likely to be a placing AND D4E.

Lol..
The simplywallstreet "fair value" compares debt and current market cap against future cashflows to predict a value.

A "fair market price" of 14p was never realistic since HUR had an overvalued market cap and an overvalued balance sheet (which includes future water injection value).

Now future cashflows are at risk.

Do your own calculations and don't believe simplywallstreet's "fair market value".

I think a lot of posters here are still waiting for the perched water to drain for the "massive upside in reserves and resources following the kitchen sink"

- Production down to 12k bopd
- Extra costs (+$60m to sidetrack)
- Potential dilution
- Potential for Lancaster to not be a going concern should stakeholders not agree
- Cash in bank diminishing

But it's all well and good right?

Lol.

Yup,

And what does the second sentence say? :O

It's the past, stop dwelling on the past as it no longer matters as this company has a new model for sales which is working.
Brian McMaster invested £770k here at 18p not long ago. I don't think he would have done that if he meant for it all to fail. He's also said again and again in Q&A that this company is undervalued and that shareholders will be rewarded.

Personally, i'm waiting for this to drop further to add more here. Great opportunity.

GLA.

bopd, john4242,

I really don't understand your skepticism.
The company has even addressed your queries in Q&A:

"What has been the key stumbling block to increasing sales of KPFértil?

We do not consider there has been a "stumbling block" in the sales rate of KPFértil. In the space of only several years, Harvest has progressed from a grass roots discovery to breakeven, with a near term expectation of profitability. In the Board's eyes, this is a remarkable achievement and one that has not been emulated by any other small cap AIM quoted company that Harvest is aware of.



During 2018, Harvest announced two sales contracts, which have not performed as hoped; that has created an expectation gap, which has disappointed the market. Whilst this is not satisfactory, it is also old news in the context of the Company's evolution and continuing to refer to that old news is not benefitting anyone. Looking at the present and immediate future, the Company has reached a sizeable sales run rate that it expects to improve on next year as it reaches profitability. Ordinarily, a profitable, dividend-paying company, which Harvest is targeting, will be re-rated by the market as it meets the investment criteria of a broader investor base."

Reading this, now that Harvest is predicted to post a profit this year, I wonder if they will announce a dividend for next year?
To me as a new investor, it looks like a turnaround is happening.
The board is doing all that they have said:
- Target sales
- Increase capacity of plant
- Breakeven 2019
- Profit 2020 (TBA in Q4 update)
- Continuous growth with market targetted (Sugarcane results, more results to follow)
- etc.

Again the only negatives I can say for HMI going forwards is cashflow.

What am i not seeing?

Captain,
Also had a google and seems like it's not HUR, but MOL Norge:
https://energi24.no/nyheter/bekrefter-bronn-trippel-for-transocean-barents

"I ****ten av november skrev Energi24 at Transocean Barents har sikret seg en ny kontrakt i Norge. Ifølge bransjekilder var det MOL Norge som hadde gitt riggen en k"

Oh well, there's still a couple Transocean rigs left I believe.

Targa,

40kt is breakeven.
50kt is was the target provided.

I am hopeful for the Q4 update :)

Haha scrodingerscat,
Just keeping an eye here for news flow etc and contribute whenever.
Amazed at oil price!

sentinel85uk,
You're right in doing so. Cashflow is important and you can estimate or predict how the company will perform.
At the end of the day, cashflow is just revenue minus all the costs.
You can estimate breakeven cashflow for next year using the information provided in the CMD:
- Estimated production
- CAPEX, OPEX, G&A, Decommissioning costs
- Estimated hedging, finance and leasing costs

Good luck with your investments!

The cashflow breakeven is just for the operation of the business.
Included in this are all outgoing costs from CAPEX, OPEX, G&A, Financial costs, interests etc.
Debt maturity (i.e. paying capital debt) is not included. Debt is usually serviced with any positive cashflow generated.

The cashflow breakeven is calculated on an annual basis as there are several aspects that influences this.
But the guideline provided by Tullow on the annual basis is 75k bopd @ $40-42/barrel (AVERAGEs over the entire year). The realised price per barrel for the year therefore is $50.2 - $51/barrel.

It's very hard to say if Tullow can achieve positive cashflow or not this year due to the drop in production in Q4 and the significant volatility in oil price.

If Tullow can squeeze out some barrels somehow via gas and water management for the remainder of the year (i.e. improvement from what we know from CMD so far), they will likely breakeven or positive cashflow.
The oil price obviously helps currently, but even so still very uncertain.

ALL IMO. GLA.

bopd,
I have gone through various material from the past.
There was no set in stone guideline.
They suggested that the plant COULD have that much sales in the future.

A company needs to walk before it can run.
Good progress is being made if you ask me regarding development and sales.
Don't forget only 2/4 crops are targetted atm (Coffee and Soybeans).

Honestly, as mentioned before, the past doesn't matter. Look at the future.
Do you think HMI will achieve the provided guideline of 50kt sales this year? BUY
Do you think HMI won't achieve the provided guideline of 50kt sales this year? SELL

That's all there is to it.

"On the Bassoe App, under latest fixtures, Transocean Barents has been awarded a new 120 day contract. Estimated dayrate $280k, April start date, operator unknown."

Apparently the above. Could it be HUR? Seems expensive for HUR.
2 Transocean rigs left suitable for HUR's needs.

Bopd,

How have they lied about the predicted sales?
To date, they still believe that overtime sales will go beyond 450kt.