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Hurricane Energy (HUR)

NigWit
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Re: Hurricane Energy (HUR)

#165142

Postby NigWit » September 8th, 2018, 2:23 pm

You’re most welcome Fabian. There’s always plenty of newsflow and speculation around Hurricane and it’s certainly fun to follow if one can keep oneself sufficiently removed. You’ve probably noticed that one of the other message boards is like the bastard child of Eastenders and Dallas, complete with mystery ships, mob rule, villains, misunderstood good guys and a ‘who shot JR’ type plot line.

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Re: Hurricane Energy (HUR)

#165222

Postby FredBloggs » September 9th, 2018, 3:32 am

The first six minutes of Malcy's Friday interview is worth a listen. Nothing new, but still worth a listen if you have a spare few minutes over breakfast. https://total-market-solutions.com/2018/09/07/malcy-talks-oil-gas-part-iv/

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Re: Hurricane Energy (HUR)

#166012

Postby FredBloggs » September 13th, 2018, 7:19 am

Operations update this morning from Dr Trice. Sub sea production systems now in place at Lancaster. All we need now is an FPSO hooked up. Very exciting indeed.

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Re: Hurricane Energy (HUR)

#166056

Postby FabianBjornseth » September 13th, 2018, 11:31 am

FredBloggs wrote:Operations update this morning from Dr Trice. Sub sea production systems now in place at Lancaster. All we need now is an FPSO hooked up. Very exciting indeed.


Absolutely! Although it's clear that the Aoka Mizu will not be ready for sailaway before the end of Q3. I'd say any hope of first oil before Q1 2019 is out the window. We might have to stay patient during the winter, as there might not be a weather window.

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Re: Hurricane Energy (HUR)

#166081

Postby FredBloggs » September 13th, 2018, 12:59 pm

FabianBjornseth wrote:
FredBloggs wrote:Operations update this morning from Dr Trice. Sub sea production systems now in place at Lancaster. All we need now is an FPSO hooked up. Very exciting indeed.


Absolutely! Although it's clear that the Aoka Mizu will not be ready for sailaway before the end of Q3. I'd say any hope of first oil before Q1 2019 is out the window. We might have to stay patient during the winter, as there might not be a weather window.

Oh, I am a patient guy 8-)

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Re: Hurricane Energy (HUR)

#166129

Postby PeterGray » September 13th, 2018, 5:32 pm

I'd say any hope of first oil before Q1 2019 is out the window

Agree it's unlikely - but was it ever not? Company guidance has always been for 2019. It's only BB chat that has become convinced otherwise.

Peter

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Re: Hurricane Energy (HUR)

#166134

Postby WessexMario » September 13th, 2018, 5:56 pm

Peter, not just bb chat; Hurricane have often said that foil might be possible in 2018, but I agree that they've never promised it until 1H19.

eg, the Environmental Statement says (page 3-3) "The first oil production is targeted for the middle of 2019 ["anticipated foil"], although it is possible it could begin as early as the end of 2018. [potential foil]"
Dr T has also stated in interview that Aoka Mizu might arrive in the field this year, but whenever pressed on a date for foil he's always stuck to the published plan with 1H19.

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Re: Hurricane Energy (HUR)

#166208

Postby FabianBjornseth » September 14th, 2018, 7:30 am

WessexMario wrote:Peter, not just bb chat; Hurricane have often said that foil might be possible in 2018, but I agree that they've never promised it until 1H19.

eg, the Environmental Statement says (page 3-3) "The first oil production is targeted for the middle of 2019 ["anticipated foil"], although it is possible it could begin as early as the end of 2018. [potential foil]"
Dr T has also stated in interview that Aoka Mizu might arrive in the field this year, but whenever pressed on a date for foil he's always stuck to the published plan with 1H19.


People have interpreted this in slightly different ways. For me, it sounds like the "technical limit" schedule would have allowed first oil to be this year. It would make sense then to flag that in the environmental statement to at least have the production permit in order, even though projects almost never come in on the technical limit.

However, the FPSO being ready for sailaway has been forecasted in company presentations to be within Q3 2019. If that is now in October, it is undeniably a delay, although a small one. Probably the Spirit deal should be seen in light of this, as further drilling was previously contingent on EPS production.

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Re: Hurricane Energy (HUR)

#166287

Postby feste » September 14th, 2018, 12:34 pm

Hi all,

Morgan Stanley, HUR's newly appointed joint broker has published an interesting note on the company, extract below :

Our base case, excluding value for contingent resources, implies 27% upside:
We assume 10-year Lancaster EPS and 8-yearGWA EPS program unlocking value for 74mnbbls of reserves
But the upside could quickly move – our bull case implies ~600% upside.
Assuming$10/bbl value for to ~785mn bbls of Lancaster and Lincoln 2C reserves, we arriveat a 292p NAV.
Assuming $80 oil prices, we see potential for a bull-case NAV of 381p.
Our bear case implies ~65% downside:
Negative EPS results could lead to a total reset of current plans.
We assume lower production for 6-year Lancaster EPS and $50/bbl oil, leading to a NAV of 18p.

You pays yer money, etc. The bull case scenarios seem broadly in line with dspp's numbers, if you knock off the effect of Spirit farm-in.

Note the 'health warning' conclusion " With the wide range of valuation outcomes and uncertainty even in the base case, we think assigning a price target is not relevant at this time. "

ATB

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Re: Hurricane Energy (HUR)

#166463

Postby NigWit » September 14th, 2018, 9:13 pm

Perhaps uniquely I’m intrigued by the 65% bear case downside to a NAV of 18p per share. Other cash in the bank, which would go the bondholders, anyway, what value would remain if the EPS is unsuccessful?

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Re: Hurricane Energy (HUR)

#166474

Postby feste » September 14th, 2018, 10:15 pm

Hi NigWit,

From the same source : "We assume lower production for 6-year Lancaster EPS and $50/bbl oil, leading to a NAV of 18p."

ATB

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Re: Hurricane Energy (HUR)

#166501

Postby FabianBjornseth » September 15th, 2018, 6:10 am

feste wrote:Hi NigWit,

From the same source : "We assume lower production for 6-year Lancaster EPS and $50/bbl oil, leading to a NAV of 18p."

ATB

.
Seems like a reasonable downside case to my understanding. The risk is not so much that the wells suddenly stop flowing after two weeks, but rather that they display pressure/rate behavior indicating limited reservoir connectivity. The FPSO would still be on station as long as the rates are economical, but a full field development would be hard to justify.

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Re: Hurricane Energy (HUR)

#166573

Postby dspp » September 15th, 2018, 4:09 pm

I have had a moment to reassess my quickie-analyses of the situation for a HUR shareholder, now that the Spirit deal has been done.

Firstly in Table 1 here is a summary of my various analyses, some of which I don't think I have put here before. I have taken a few liberties with time allocation to make things easier to read. You can see how my view, and that of the market, have evolved. The latest is the lowest line of course, which I will turn to next.



I am rather pushed for time so if you don't at first glance understand Table 2+ then please read back through my earlier analyses as it is much the same. I have restructured to allow for the Spirit %. I have adjusted my $/bbl for status to delineate between a $3 and a $5 value-point in a way that is more conservative than before.






I hope this helps. It is a quick-and-dirty approach to the analysis as only a couple of these figures can be directly traced back to a DCF. It takes no account of recent oil price increases, at least not directly, and so is somewhat conservative. It ignores capital accruing or being spent for reasons I explain in other posts and which can be extended (roughly) to the period of interest here. All is on a fully diluted basis. I haven't had a chance to read the analyses of MS etc. so I'm not sure if I am on the same basis as them.

(I am not around TLF a great deal right now. I am extremely busy at work. I am (at least for now) still a TLF mod and so if I spot something untoward in my allocated area during a rare visit then I will do whatever is necessary.)

regards, dspp

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Re: Hurricane Energy (HUR)

#166583

Postby ap8889 » September 15th, 2018, 4:58 pm

Very many thanks DSPP. Hurricane has swelled to become quite significant to me, I am watching the various activities with interest.

My understanding: The deal with Spirit takes some potential reward off the table but substantially reduces the future development cash requirements and risk for the company. I am very happy the board chose to give away a little upside to bag the safer option gaining a significant partner and extra credibility.

Reading the OGA presentation linked on another board the ‘use it or lose it’ threat was very apparent which must have partly influenced the thinking: Dr Trice must be anxious to poke a hole into some of the structures for science and profit, while the OGA is clearly mandated to be awkward if the license is not being actively explored/drilled/developed.

So the farm-out is great news, even if the value to HUR appears to be lessened from your table as the risk/reward has probably improved.

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Re: Hurricane Energy (HUR)

#167628

Postby dspp » September 20th, 2018, 9:23 am

HUR mid-year RNS
https://www.hurricaneenergy.com/communi ... ws-service
or
https://otp.tools.investis.com/clients/ ... id=1189009

extract below, but go and read the full thing online as it has plenty more detail if you are that way inclined.

*****************************************

Half-year Results 2018

Hurricane Energy plc, the UK based oil and gas company focused on hydrocarbon resources in naturally fractured basement reservoirs, is pleased to provide its 2018 interim report and half-year results for the period ended 30 June 2018.

Dr Robert Trice, Chief Executive of Hurricane, commented:

"During the first half of 2018, Hurricane has been focussed on the Lancaster Early Production System (EPS) development. I am delighted to report that operations have progressed to plan and within budget, allowing us to reiterate our first oil guidance of H1 2019.

The two production wells have been completed, the turret mooring system (TMS), subsea umbilical, risers and flowlines (SURF) have been installed at the field, and the upgrade and life extension of the Aoka Mizu FPSO is in its final stages in Dubai. Sea trials for the Aoka Mizu are due to commence by the end of September, with sailaway to follow shortly thereafter.

At 30 June 2018, the Company had $210.1 million in cash and liquid investments, of which $178.6 million was unrestricted. With the well completion, TMS installation and SURF installation phases complete, we remain confident in becoming cash generative based on existing funds. I'd like to acknowledge the outstanding contributions of all our staff and contractors, and our Tier 1 contractors: Bluewater Energy Services, TechnipFMC, Petrofac and Transocean, in delivering the operational progress that has allowed us to reach this position.

As we noted in our 2017 Annual Report, the task in front of us is to de-risk and monetise the substantial contingent and prospective resources across all of our assets. The recently announced farm-in by Spirit Energy (post period-end) to the Greater Warwick Area (GWA) is a first step on this path. The transaction accelerates the appraisal and initial development of the GWA and frees up cash flow from the Lancaster EPS to further appraise and develop the Greater Lancaster Area (GLA) and Whirlwind. We are delighted to have agreed a development strategy with a like-minded company which brings significant operating and financial capacity, together with experience in fractured basement reservoirs.

Following this transaction, Hurricane's outlook for 2019 now includes three GWA wells in addition to first oil in H1 from the Lancaster EPS. The next steps on the GLA remain subject to data obtained from the EPS. However, we believe that we will be able to undertake a drilling campaign on the GLA in 2020/21, ahead of planning for further development. We are entering a very exciting time for the Company and its shareholders. I look forward to first revenues and continued appraisal and development of our significant Rona Ridge resource base next year."

2018 Interim results summary

Financial results

· The Group's loss after tax for the first half of 2018 was $75.1 million (H1 2017: $4.2 million), including a non-cash fair value loss on the embedded derivative element of the convertible bond of $70.2 million

· Operating expenses for the period were $4.7 million (H1 2017: $6.0 million)

· As at 30 June 2018, the Group had cash, cash equivalents and liquid investments of $210.1 million (31 December 2017: $360.1 million). This includes $39.0 million of liquid investments held in term deposits which mature within 12 months and $31.5 million held in escrow accounts

· The net decrease in cash, cash equivalents and liquid investments in the period was $149.9 million (including the effects of foreign exchange rate changes), the majority of which was related to investment in the ongoing development of the Lancaster EPS, with net cash outflow from operating activities of $2.7 million

Operational and corporate developments/outlook

· Lancaster EPS first oil guidance maintained at H1 2019

· Significant Lancaster EPS development hurdles achieved, including:

o Delivery of TMS and SURF

o Completion of the two production wells

o Conclusion of the offshore installation programme which included installation of TMS and SURF

o Final stages of Aoka Mizu life extension and upgrade works reached in Dubai, with sea trials to commence by the end of September and sailaway anticipated shortly thereafter

· Spirit Energy farm-in to GWA completed

o Agreed five-phase work programme targeting development with 500 million barrels of reserves, significantly accelerating development of the GWA

o Up to $387 million in carry

o Hurricane fully carried on first phase of up to $180.6 million, including the drilling of three wells on the GWA in 2019

· Transocean Leader rig contracted for the three 2019 GWA wells, to begin in Q1

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Re: Hurricane Energy (HUR)

#167661

Postby ap8889 » September 20th, 2018, 11:28 am

Not much to say that hasn't already been covered by the Operational Update and the farm-in RNS. Things progressing on schedule, on budget. All eyes now on the Aoka Mizu to undock, complete trials and head north west 2000 miles and things will start to get interesting. We are on the cusp of a really exciting new phase.

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Re: Hurricane Energy (HUR)

#167687

Postby NigWit » September 20th, 2018, 1:38 pm

Whilst I generally welcome today’s results I’m left with two concerns.

Firstly, I think the company has kicked the can down the road regarding listing on another market. They set up the governance committee almost a year ago and are still procrastinating. I hope certain large share holders remain engaged on this to make sure it happens because the comments on this read to me like a non-progress report and are far from positive, except maybe to the most rose-tinted spectacle wearers.

I’d also like to see a more equal distribution of sexes at top level. It’s unacceptable in this day and age that a company as large as Hurricane Energy has no women board members.

Secondly, has anyone performed a detailed calculation of the remaining costs of the EPS and total overhead until FOIL to establish how long before the cash runs out and how much will remain at FOIL? This seems to me to be the most relevant test of today’s RNS announcement. We don’t want any more dilution if there are unforeseen contingencies. I ask since, if the amount of cash spent in H1 is repeated in H2, and I am not suggesting that it will be because I don’t know, then things are tight.

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Re: Hurricane Energy (HUR)

#167718

Postby ap8889 » September 20th, 2018, 3:44 pm

Q1: Moving to a Premium listing: I guess they want to check they actually have something viable to list. If the EPS fails and they have paid for FTSE 350 status then the Board is going to have a lot of egg on their face.

Q2: Women on the board: That is in my view the dictionary definition of irrelevant. Why should gender matter at all? Are you suggesting we hire someone just because of their gender? Because that really would be sexist, no?

The real question is “is the board competent and delivering for shareholders as promised?”, my own opinion is yes they are.

Q3. Cash flow. Good question, but my impression is that no additional dilution will be necessary. With the 178million warchest, mostly free carry for GWA, most of the big items of the Lancaster EPS now constructed, and Dr Trices comments “becoming cash generative within existing funding” the evidence seems to be that management are not currently planning on asking for a fundraise in the near term. Success at EPS would perhaps be a more opportune time to sell new equity in any case.

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Re: Hurricane Energy (HUR)

#167727

Postby Clitheroekid » September 20th, 2018, 4:42 pm

NigWit wrote:It’s unacceptable in this day and age that a company as large as Hurricane Energy has no women board members.

Why? If a company is recruiting women to the board just to fill some sort of quota it's pure tokenism and a sign of weak and hypocritical management. I would also imagine that any woman that was hired simply for PR purposes would feel - quite rightly - incredibly patronised.

All such appointments should be solely on merit and suitability for the post, not on the grounds of sex, race, disability etc. Once you bring parameters like that into the equation who decides what weight to give them and how they should be applied in any given case? Are you saying that a female candidate who was objectively inferior to a male candidate should nevertheless be selected purely because she's a female?

Tokenistic recruiting like that should be left to the public sector, who are, rightly or wrongly, expected to carry out social experiments at our expense. Private companies should be left to recruit the best people for the job.

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Re: Hurricane Energy (HUR)

#167730

Postby NigWit » September 20th, 2018, 5:01 pm

https://www.theguardian.com/business/20 ... ays-report

Not that I’m usually a Guardian reader but, as you’ll see, Hurricane’s lack of females has been noted adversely. I’d prefer them to recruit a diverse leadership team from the whole talent pool and not just half of it because I believe that it’s important to discourage the groupthink that’s inevitable when all individuals are similar.

Anyway, it’s inconceivable that all the best people are old, white and male (like me) so it should be a concern.

———-

Perhaps more importantly. It’s all very well to say that the company won’t run out of money but what else would we expect them to say at this stage? I’d like to see a breakdown showing how the money has been spent, what remains to be paid for and how long before cash dries up. It would not need to be overly detailed, just a bit clearer than today’s announcement. Funnily enough I think I’d be more likely to trust it coming from a woman too.


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