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Hurricane Energy (HUR)

Carcosa
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Re: Hurricane Energy (HUR)

#158418

Postby Carcosa » August 10th, 2018, 6:37 am

As FOIL approaches I’m considering shifting some of my investment in Hurricane stock to CA but I just thought I’d throw this out there and see if anyone else has a view.


A long time ago CRS used to follow HUR share price almost by the minute but you can see in this tweet of mine in early July there was a large disconnect between a relatively large increase in HUR (and FFX) share price and very little happening to CRS. I keep a dummy portfolio reflecting CRS top ten list and monitor the discount/premium. Do not rely too much on any 'published' figures because they tend to refer to the holdings at the FY end for CRS. As you noted, the CRS Monthly Holdings RNS gives you a clearer picture but 1) They tend to be a week old and 2) It highlights to investors the NAV discount at which point it is 'too late' as that discount rate is quickly narrowed. And yes, CRS have traded to a premium on occasion.

It should also be remembered that CRS have unexercised share options in HUR.

Significant news driven share price activity on HUR has not, in recent times, been reflected in CRS share price so potentially you will have an opportunity to trade after the fact in CRS. In other words if HUR opens significantly higher/lower in the morning you may be able to take advantage by buying/selling CRS. However, you will need to take account for the spread on CRS and costs which can be significant.

As regards when to trade I would judge that largely on the discount/premium and not so much on discrete events such as FOIL.

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Re: Hurricane Energy (HUR)

#160895

Postby FabianBjornseth » August 20th, 2018, 10:36 pm

This photo apparently shows well testing at Lundins Rolvsnes FB discovery. Can't read much out of it other than that it was flowing at some point. No results available yet.

https://www.instagram.com/p/Bmse0KKDm9s ... 8pa8t2zbsp

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Re: Hurricane Energy (HUR)

#162335

Postby FabianBjornseth » August 27th, 2018, 6:41 am

The results are in - Lundin declares that the production test on Rolvsnes was successful, and significantly upgrade the resource range:

https://www.lundin-petroleum.com/succes ... -rolvsnes/

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Re: Hurricane Energy (HUR)

#162352

Postby PeterGray » August 27th, 2018, 9:06 am

It's another basement reservoir. And relatively nearby.

From the Lundin press release: https://www.lundin-petroleum.com/press-room/

The well was drilled horizontally in the reservoir interval and encountered 2,500 metres of fractured and
weathered basement. Extensive data acquisition and sampling have been carried out in the reservoir, including
a 10 day production test with production logging and bottom hole fluid sampling. A maximum constrained
production rate of 7,000 bopd was achieved, while the 5 day main flow period was held at a production rate of
4,200 bopd. The test results show good reservoir productivity and connection to a significant oil volume that
benefits from aquifer pressure support, which are positive factors towards demonstrating commercial recovery
at Rolvsnes.


The only other fractured basement under development in the NS, as far as I know.

Peter

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Re: Hurricane Energy (HUR)

#162361

Postby NigWit » August 27th, 2018, 9:40 am

This is most encouraging. Hurricane were the only company exploring basements but now there is another and it's successful so far. This can only lend credibility in my view. Is anyone able to provide a relative layman with any insight into how similar the geology is with that at the Rona Ridge?

Thank you for keeping us informed on this Fabian

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Re: Hurricane Energy (HUR)

#162371

Postby Carcosa » August 27th, 2018, 10:43 am

Sufficiently of interest for Huricane to Tweet about it: https://twitter.com/hurricomms/status/1 ... 7328652288

Hurricane were the only company exploring basements...
Not quite true as there are numerous other companies successfully doing that around the world and indeed there have been a few pokes into basement in the NS over the years which Trice has used in his initial evaluations. However I would agree that Hurricane are the first to make a go of it in the NS.

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Re: Hurricane Energy (HUR)

#162432

Postby FabianBjornseth » August 27th, 2018, 4:07 pm

The Lundin Exploration Manager made a comment to media that a tieback and extended well test is likely to happen in 2020-21. By that time we should know how things have shaken out for Hurricane, so further data from Rolvsnes should be of limited interest. But it is a good thing to have another operator proving this reservoir concept in the North Sea, especially as they may share knowledge to increase the likelihood of success.

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Re: Hurricane Energy (HUR)

#162433

Postby feste » August 27th, 2018, 4:13 pm

Hi all,

HUR acted as consultant to Lundin on Rolvsnes and have retweeted their RNS (Norwegian equiv.) today.

They've been working together for years, doing presentations at conferences together see hxxps://www.hurricaneenergy.com/~/media ... stract.pdf

I was involved with the Lundins back in the 80's when they were migrating/ expanding their interests from mining to hydrocarbons. We financed in consortium a small field development offshore Oman. Ashley Heppenstall was the external consultant on the project who , in time-honoured fashion, went on to join the Lundins and latterly became CEO of Lundin Petroleum, where he is still a Director.

Group companies were often Vancouver-based and their style was considered at the time perhaps somewhat 'buccaneering'.

Change that to 'mouldbreakers' and you can see why they'd likely be a 'good fit' for HUR if we go down the Interim Field Development / farm-out route : They know (and presumably get on well with) Dr T - still important in a 'personality' business ; with an £ 8.5Bn Mcap, they're a useful mid-size; and - with their own FB expertise/experience - they'll be better placed than the majors to value EARLY and CONFIDENTLY the potential risks and rewards that HUR presents.

Interestingly/ ironically , Norway's parastatal Statoil which has a significant ( 12% ?) stake in Lundin Petroleum acquired it in exchange for its stake in the Edvard Grieg field, where Rolvsnes is located....

I think this news is important for HUR on a number of levels...;->

ATB

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Re: Hurricane Energy (HUR)

#162456

Postby feste » August 27th, 2018, 6:00 pm

Hi all,

My bad ! I stated this as fact : …"HUR acted as consultant to Lundin on Rolvsnes" in good faith, but relied on another poster instead of double-checking .
I've now gone back to him for HIS source and will revert on his reply.

To be continued...

ATB

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Re: Hurricane Energy (HUR)

#162476

Postby feste » August 27th, 2018, 8:33 pm

Hi all,

My source has now come back with
http://www.upstreamonline.com/hardcopy/ ... n-projects

from which

…"The Rolvsnes reservoir is a porous granitic basement play previously not tested or developed in Norway.
As a result, the horizon to development is longer than for Luno 2, said field development manager Espen Gjorv.
“It will be a step-wise development, because we will need to learn as we go along”, said Gjorv.
Lundin is co-operating with Hurricane Energy, which has in its Lancaster field off the UK one of the few similar fields worldwide, he added...."

HTH and ATB

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Re: Hurricane Energy (HUR)

#163876

Postby NigWit » September 3rd, 2018, 11:35 am

Interesting news today. Looks to be some short term profit taking now the share price is at a 14 month high but for more patient long term holders it must go a long way to validate the data, which only the majors with deep enough pockets have seen. Aside from short term considerations does the farm out support the view that Trice has been bargaining hard but had to acquiesce mildly to de-risk the company before Lancaster FOIL?

For my part I’m much happier now there are two routes to monetizing.

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Re: Hurricane Energy (HUR)

#163901

Postby NigWit » September 3rd, 2018, 1:05 pm

Simon Thompson in the Investors' Chronicle likes the deal and he's often influential.

Link (for subscribers).

https://www.investorschronicle.co.uk/co ... tal-amber/

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Re: Hurricane Energy (HUR)

#163937

Postby FabianBjornseth » September 3rd, 2018, 2:42 pm

I really like this deal as we are now getting an ambitious partner that carries the exploration cost of Lincoln/Warwick. Consider that this area has not yet had a flowing well when judging the value of the 50% stake Spirit Energy have acquired. If the 3 wells in 2019 have a disappointing outcome, Hurricane will know this at no cost - although Lancaster has performed very well, reservoirs are not the same.

Accelerating gas export means accelerating production, which means both more funds and more data, boosting the value of all assets. Making a trade means giving up something, but I think Hurricane are overall in a better position than they were on Friday.

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Re: Hurricane Energy (HUR)

#163957

Postby Clitheroekid » September 3rd, 2018, 4:26 pm

Some interesting (at least to me) commentary here - http://www.proactiveinvestors.co.uk/com ... 04070.html

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Re: Hurricane Energy (HUR)

#163960

Postby PeterGray » September 3rd, 2018, 4:47 pm

FredBloggs wrote:Of course, I only see it from a simple mans perspective. But I'd much rather they'd had a discounted equity offer to existing holders, say 3:1 or something. That way, we'd still have 100% of the upside. Myself, on the face of it, I don't think getting in bed with a 3rd or 4th division operator is a great idea. It sends all the wrong signals out to the market.


I'm very happy with the deal. Whatever HUR do will dilute shareholders, either by increasing the number of shares, as last summer, or by reducing the directly held assets, as here. That's an inevitable part of the process of a small E&P developing two (very) large fields. They've done the first, and cleverly kept both 100% of GLA, and a potential - though slow - route to full self development. Now they are going the other route with the GWA, bring in a partner with cash (and is it really fair to call Spirit 3rd or 4th division?) and getting carried towards a much faster development (and cash flow) there (and sorting out the gas export issue for both fields at the same time). That looks like a good move, spread the risk and bring production forward.

Of course we know the slow self funded route for the GLA FFD was never intended as the likely outcome, but keeps HUR's options open and bargaining power up. But there are real drawbacks to planning to develop over decades - what value will anyone give to oil that won't be produced for 20-40 years? It seems to me this deal helps address that. The GWA could have waited years for significant appraisal and development, left to HUR alone. This gives HUR more production sooner, and it puts the pressure on anyone thinking of bidding, in some form, for the rest of HUR's assets. It demonstrates that HUR isn't just going to sit there, and let things progress slowly till someone moves in, they are actively working to move things forward themselves, and if you want a decent slice of the GLA, or of the GWA, you shouldn't assume it will still be there in a year or two to pick up.

Peter

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Re: Hurricane Energy (HUR)

#163962

Postby Sorcery » September 3rd, 2018, 4:58 pm

PeterGray wrote:and is it really fair to call Spirit 3rd or 4th division?


I would have thought not, it's 69% owned by Centrica :
https://www.centrica.com/news/spirit-en ... nt-venture

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Re: Hurricane Energy (HUR)

#164051

Postby FabianBjornseth » September 4th, 2018, 8:15 am

I did not give much thought yesterday to what other sources of capital for the accelerated work program might have been available.

1) Loan facility - if it is even possible, I expect bank money for the purpose of drilling exploration/appraisal wells would command a very high interest. It could also put the company in a position where production issues at the FPSO puts the entire equity at risk.

2) Equity offering - perhaps more feasible, but has the downside that it dilutes the entire Hurricane portfolio. Or would existing shareholders have $500 million for this purpose?

I don't see that either if these would be particularly preferable to the Spirit deal. Then it's the question of whether it's worth giving away some upside to accelerate and derisk Hurricanes stake in the discovery/prospect.

If Hurricane had done a similar deal after only 1 well had been drilled on Lancaster, would it have been the right move? I would think not, but then the company is in a different place today. As they can now develop both assets at an accelerated pace, I think it makes sense. I would have loved for Spirit to carry even more cost, but the value of the deal seems fair considering how unproven the Lincoln/Warwick area is.

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Re: Hurricane Energy (HUR)

#164071

Postby NigWit » September 4th, 2018, 9:21 am

Good coverage in the quality press. Here’s a link to today’s Times for subscribers

https://www.thetimes.co.uk/article/hurr ... c804fe528d

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Re: Hurricane Energy (HUR)

#164116

Postby StepOne » September 4th, 2018, 12:01 pm

FredBloggs wrote:Malcy is very excited this morning. Recommend you have a listen to the first few minutes here - He likens HUR to "buying twenty quid notes for a fiver".


Hm, in terms of Malcy's usual over-enthusiasm I actually find "twenty quid for a fiver" a bit disappointing! Even dspp is talking about higher potential than that..!

StepOne

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Re: Hurricane Energy (HUR)

#164812

Postby Carcosa » September 7th, 2018, 7:17 am

As I have done in years gone by, I present an excerpt from Crystal Amber Fund's prelims, issued today. Always worthwhile seeing an overview from a long term active shareholder.
==================================================

Hurricane is an oil exploration company targeting naturally fractured basement reservoirs in the West of Shetland. It controls 2.6 billion Barrels of Oil Equivalent (“BOE”) certified resources and reserves. The Fund’s previous annual reports include additional background information on this investment.

This was an eventful year for Hurricane. In July 2017, it completed the largest ever oil fundraising on AIM. It raised US$530 million to fully fund an Early Production System (“EPS”) on its Lancaster field. The EPS’s production rates will contribute to a better understanding of the asset. The data generated over the first six months of production will help model the economics of a full field development and inform farm-out discussions with potential partners. Additionally, at an oil price of US$60 per barrel, the EPS is expected to generate over US$200 million in operating cash flow per annum.

Unfortunately, the EPS fundraising created a significant disconnect between the share price and the asset value. The dilutive nature of the US$300 million equity raise was compounded by the large size of the US$230 million convertible loan note. Shares only recovered above the placing price in 2018, as the good news-flow of the EPS’s progress gathered momentum.

In the aftermath of the fundraising, corporate governance shortcomings at the company became apparent. In November 2017, Robert Arnott resigned as chairman with immediate effect, criticising the company’s corporate governance standards. These concerns were publicly shared by the Fund. The company instituted a board committee to address these issues and bring its internal procedures in line with its current size and complexity. As the largest independent shareholder, the Fund engaged intensely with the board over the existing issues and in connection with the recruitment of the new chairman. Steven McTiernan’s appointment as chairman was announced in April. He brings a wealth of experience and having met him before his appointment, we are confident that he will oversee high standards of corporate governance. His M&A experience should help management along the path of asset monetisation. We are pleased that the Fund’s concerns regarding the need to improve corporate governance and standards were not only recognised by the company but are being addressed. We look forward to additional independent directors joining the board.

In December 2017, Hurricane published a Competent Person’s Report (“CPR”), increasing its combined resource estimate to 2.6 billion BOE. Together with the previously published CPR for Lancaster, Hurricane now has an updated assessment of its licences. The CPRs incorporate the results of all exploration campaigns undertaken since Hurricane’s initial public offering in 2014.

Hurricane shares re-rated over the year as the time for first oil from the EPS draws closer. The Fund reduced its holding into demand and realised a profit of £7.6 million, which brings total realised gains in Hurricane to date to £23.6 million.

In September 2018, Hurricane announced a farm-in deal with Spirit Energy Limited (“Spirit Energy”). This covers the Greater Warwick Area, an asset at an early stage of exploration and appraisal to which little value had been assigned by market participants. In return for a 50% stake, Spirit Energy will contribute with up to $387 million to Hurricane’s share of capital expenditure covering a three-year work plan. The deal accelerates the conversion of resources to reserves and critically validates the attractiveness of UK fractured basement reservoirs to other industry participants.

The Fund is a longstanding supporter of Hurricane. It has funded its exploration efforts since 2013 and its EPS strategy since 2016, when long lead items that are only now being installed were first purchased. The execution of the EPS to date has been excellent. Milestones have been achieved ahead of target, and the company is working towards first oil early in 2019.


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