Hurricane Energy (HUR)

[thehaggistrap]

The new board have dropped ball. Kitchen sinking trashed price to such a low level that even 50% dilution would be pointless.

What I want to know is who owns the bonds? This is one piece of the jigsaw not in public domain. Will Kerogen fund the future work programme in return for a controlling interest in the company? If that happens then I smell a giant RAT.... Remember Kerogen appointed Dr Parsley to the board as part of the technical review. He subsequently quit the board shortly after the infamous kitchen sinking. If they were to benefit as bond-holder that would be suspicious.

Share holders who literally lost fortunes in Hurricane will be watching with interest who the bond holder might be...
Hurricane is finished as an investment for share holders - however the corpse is likely worth something to someone.

[dspp]

The new board have dropped ball. Kitchen sinking trashed price to such a low level that even 50% dilution would be pointless.

What I want to know is who owns the bonds? This is one piece of the jigsaw not in public domain. Will Kerogen fund the future work programme in return for a controlling interest in the company? If that happens then I smell a giant RAT.... Remember Kerogen appointed Dr Parsley to the board as part of the technical review. He subsequently quit the board shortly after the infamous kitchen sinking. If they were to benefit as bond-holder that would be suspicious.

Share holders who literally lost fortunes in Hurricane will be watching with interest who the bond holder might be...
Hurricane is finished as an investment for share holders - however the corpse is likely worth something to someone.

The other very important set of facts are the terms relating to the convertible bond, especially those that would come into force in the event of non-payment and/or a admin/liqd'n/similar event. The HUR board have for years remained silent on that, in the face of repeated requests from private shareholders for these. I know this, because I myself have asked.

regards, dspp

[dealtn]

The new board have dropped ball. Kitchen sinking trashed price to such a low level that even 50% dilution would be pointless.

What I want to know is who owns the bonds? This is one piece of the jigsaw not in public domain. Will Kerogen fund the future work programme in return for a controlling interest in the company? If that happens then I smell a giant RAT.... Remember Kerogen appointed Dr Parsley to the board as part of the technical review. He subsequently quit the board shortly after the infamous kitchen sinking. If they were to benefit as bond-holder that would be suspicious.

Share holders who literally lost fortunes in Hurricane will be watching with interest who the bond holder might be...
Hurricane is finished as an investment for share holders - however the corpse is likely worth something to someone.

The other very important set of facts are the terms relating to the convertible bond, especially those that would come into force in the event of non-payment and/or a admin/liqd'n/similar event. The HUR board have for years remained silent on that, in the face of repeated requests from private shareholders for these. I know this, because I myself have asked.

regards, dspp

But why should details of a private contract be made public?

Just to suit the needs of the equity holders isn't enough.

[dspp]

The new board have dropped ball. Kitchen sinking trashed price to such a low level that even 50% dilution would be pointless.

What I want to know is who owns the bonds? This is one piece of the jigsaw not in public domain. Will Kerogen fund the future work programme in return for a controlling interest in the company? If that happens then I smell a giant RAT.... Remember Kerogen appointed Dr Parsley to the board as part of the technical review. He subsequently quit the board shortly after the infamous kitchen sinking. If they were to benefit as bond-holder that would be suspicious.

Share holders who literally lost fortunes in Hurricane will be watching with interest who the bond holder might be...
Hurricane is finished as an investment for share holders - however the corpse is likely worth something to someone.

The other very important set of facts are the terms relating to the convertible bond, especially those that would come into force in the event of non-payment and/or a admin/liqd'n/similar event. The HUR board have for years remained silent on that, in the face of repeated requests from private shareholders for these. I know this, because I myself have asked.

regards, dspp

But why should details of a private contract be made public?

Just to suit the needs of the equity holders isn't enough.

dealtn,

Yes, I get that point, and had considered it myself on many occasions over the past few years.

If the contract contains a confidentiality clause then a) it should be respected, but b) should not have been included in the first place - after all it (knowledge of the bond terms) gives one group an information advantage in their parallel share dealings on a public exchange. If the contract does not contain a confidentiality clause then the board are at liberty to unilaterally disclose. Ditto for the price information. Ditto - to a much lesser extent - for the bond ownership information. What this really gets to is that there has likely been poor governance and information asymmetry going on for a long time, not only in the sub-surface.

Neither of the above would have prevented the board making a statement about why they were not disclosing, given that they were quite aware of the many PIs asking exactly this question for years now. That they have not even done this is itself revealing, as one tends to draw the worst conclusions. (I have some sympathy for the board here - I have myself negotiated equivalent financial arrangements, details of which I could not disclose to all the (our) individual shareholders for very sound reasons. Of course the board were fully in the loop. However I did take the time to explain the reasoning to the private/individual shareholders so that they could understand the why for the keeping of some of the detail private to the parties. The corresponding step has not been taken for HUR, and as things are turning out, it may be pivotal in terms of who gets the final remaining crumbs of value).

This is an interesting set of entrails to pore over is it not ? If one were to wish to do so, then many AIM governance lessons could be identified. Funnily enough I think that just as with much that happens, this will be studiously avoided by the relevant authorities.

regards, dspp

[dealtn]

The other very important set of facts are the terms relating to the convertible bond, especially those that would come into force in the event of non-payment and/or a admin/liqd'n/similar event. The HUR board have for years remained silent on that, in the face of repeated requests from private shareholders for these. I know this, because I myself have asked.

regards, dspp

But why should details of a private contract be made public?

Just to suit the needs of the equity holders isn't enough.

dealtn,

Yes, I get that point, and had considered it myself on many occasions over the past few years.

If the contract contains a confidentiality clause then a) it should be respected, but b) should not have been included in the first place - after all it (knowledge of the bond terms) gives one group an information advantage in their parallel share dealings on a public exchange. If the contract does not contain a confidentiality clause then the board are at liberty to unilaterally disclose. Ditto for the price information. Ditto - to a much lesser extent - for the bond ownership information. What this really gets to is that there has likely been poor governance and information asymmetry going on for a long time, not only in the sub-surface.

Neither of the above would have prevented the board making a statement about why they were not disclosing, given that they were quite aware of the many PIs asking exactly this question for years now. That they have not even done this is itself revealing, as one tends to draw the worst conclusions. (I have some sympathy for the board here - I have myself negotiated equivalent financial arrangements, details of which I could not disclose to all the (our) individual shareholders for very sound reasons. Of course the board were fully in the loop. However I did take the time to explain the reasoning to the private/individual shareholders so that they could understand the why for the keeping of some of the detail private to the parties. The corresponding step has not been taken for HUR, and as things are turning out, it may be pivotal in terms of who gets the final remaining crumbs of value).

This is an interesting set of entrails to pore over is it not ? If one were to wish to do so, then many AIM governance lessons could be identified. Funnily enough I think that just as with much that happens, this will be studiously avoided by the relevant authorities.

regards, dspp

It's a private placement, so doesn't need a confidentiality clause. Whoever is the other side is entitled to it being private. Another party could have taken out another Bond contract at some point in the past, and enjoyed the same confidentiality (and commercial risk) but that never happened. The bond holder is also off side, btw!

You also wouldn't know if the originator of the Bond (who the contract between the company and the financer was agreed) is the same as the current holder. So even if the terms were discovered it might not give you the information as to who "benefits".

The fact it is listed equity is irrelevant, no listing rules would be broken. If there wasn't a Bond, but there was bank financing you wouldn't know, or expect to be made available, the full terms of the bank contract either.

The reality is the equity is just a small stub of the Capital now, maybe 15-20% of the Enterprise Value. As such expect volatility and price moves of 50% over relatively short periods of time. These will be opportunities for the brave, no doubt.

Where your belief sits on the spectrum of "fraud" to "high commercial risk that didn't pay off" won't alter this.

[thehaggistrap]

^
the obvious governance question is if the "new board" at HUR are now working in interest of the shareholders or the bondholders ?

*If* Kerogen are the major bond holder that is potential conflict of interest.
Kerogen commissioned Septembers technical report and then sharply quit their seat on the board once it was delivered.
Now it seems there is a good chance Kerogen *might* take control of company if bond not re-paid ?

Should that turn out to be the case then something is utterly rotten!

[dealtn]

^
the obvious governance question is if the "new board" at HUR are now working in interest of the shareholders or the bondholders ?

*If* Kerogen are the major bond holder that is potential conflict of interest.
Kerogen commissioned Septembers technical report and then sharply quit their seat on the board once it was delivered.
Now it seems there is a good chance Kerogen *might* take control of company if bond not re-paid ?

Should that turn out to be the case then something is utterly rotten!

I have no idea who is the bondholder, but can you explain how that is rotten?

If Kerogen remained on the Board, and then acted in favour of the bondholders (and they were the bondholder) how would that be viewed?

If they are genuinely conflicted is it not better for them to be off the Board?

[dspp]

It's a private placement, so doesn't need a confidentiality clause.

Where your belief sits on the spectrum of "fraud" to "high commercial risk that didn't pay off" won't alter this.

Surely either the bond contains a confidentiality requirement, or it doesn't. I don't ordinarily go anywhere near bonds, and I think you are from that background. Surely it doesn't really matter whether the bond contains the confidentiality requirement directly, or via reference to some common terms, but the underlying point is that either confidentiality requirements are in there or they are not. If they are not in there, then HUR can publish if they were to unilaterally choose to do so. In much the same way as I could publish the price I got for the car I sold a few years ago, irrespective of whether the other party were to kick up a fuss over it or not*. And if they are in there, then at the very least HUR can say so as a reason for non-publication of the terms. Ditto for the price. Ditto for the ownership.

My personal opinion is that the majority of what has gone on here is "high risk play that didn't come off", but also there have been some "less than transparent disclosures at critical moments" and some "non-ideal behaviours". And as you say that is pretty irrelevant, except to take my own personal lessons from. And of course to look forwards to the entrails of the technical subsurface to the extent that they may become understood, as that is always of interest.

regards, dspp



* I got about £50 from a scrappy. My needs tend to be pretty simple.

[thehaggistrap]

I have no idea who is the bondholder, but can you explain how that is rotten?

^ we have no idea if Kerogen are the bond holder.

however : *if* they are *and* subsequently take control of the assets then questions will be asked.
remember the share price was trashed by a technical report which they commissioned before quitting the board.
Kerogens role in this is significant : they played a major role in funding the Lancaster development from 2016 onwards.

clearly things are bad at Hurricane (I sold out at huge loss).
however right now it is impossible to say if board are acting in best of interest of bond holders or share holders.

[dealtn]

Surely either the bond contains a confidentiality requirement, or it doesn't. I don't ordinarily go anywhere near bonds, and I think you are from that background. Surely it doesn't really matter whether the bond contains the confidentiality requirement directly, or via reference to some common terms, but the underlying point is that either confidentiality requirements are in there or they are not. If they are not in there, then HUR can publish if they were to unilaterally choose to do so.

I wouldn't know if there is a specific confidentiality agreement, but there might be. Bank financing would likely have terms concerning disclosure (which works both ways).

Even if not, they are negotiating with the bondholders. Why would they take the unilateral risk of disclosure, and potentially harm the interests of the company in such negotiations?

What would be more interesting would be knowing what other parties they are negotiating with for potential re-financing. There would certainly be secrecy surrounding those, if they existed.

[JonnyT]

Whilst we don't know who holds the bonds, the terms are in the public domain as I found them months ago.

The interesting bit is that the BoD can take on another $30m debt WITHOUT permission of the Bond Holders and there were no clauses around spending cash etc. without Bond Holder approval.

Everyone seemed to assume it was a slam dunk.

[dspp]

Whilst we don't know who holds the bonds, the terms are in the public domain as I found them months ago.

The interesting bit is that the BoD can take on another $30m debt WITHOUT permission of the Bond Holders and there were no clauses around spending cash etc. without Bond Holder approval.

Everyone seemed to assume it was a slam dunk.

That's interesting - I've not seen any comment regarding your discovery - can you post the terms here, or a link ?

regards, dspp

[JonnyT]

It was actually buried deep in one of the Annual Reports, probably the one after they had raised the funds.

[Tinderboy]

Another risk is an EXODUS of key workers from the Aoka Mizu if no news is forthcoming, worse still another end of the world RNS....

[Proselenes]

Water cut increasing again and with the pumps already turned on.

With pumps on 23% 18th Dec 2020
https://www.investegate.co.uk/hurricane ... 00050931J/

Now 14th Jan 2021 Todays RNS its 25% with pumps on.


This is the same way that well 7 went, at this rate with the pump already turned on it will only be a matter for 3 or 4 months and water cut will be approaching 50% levels in my opinion. The rate of increase increases rapidly based on well 7 performance.

[dspp]

The 18-Dec-20 RNS : https://www.investegate.co.uk/hurricane ... 00050931J/

The 205/21a-6 well is currently producing at c.12,300 bopd on artificial lift with a c.23% water cut.



The 14-Jan-21 RNS : https://ir.design-portfolio.co.uk/viewe ... P7,T6GI0,1


The Lancaster field continues to produce from the 205/21a-6 well alone, with current production of c.12,100 bopd on artificial lift and a water cut of c.25%.

regards, dspp

[thehaggistrap]

^ Rising oil price might just yet save Hurricane and make a risky side track financially viable.
However the important point from that RNS is what is not written.
As far as I know there is no production guidance going forward beyond end of December.

[mearnsfool]

Another risk is an EXODUS of key workers from the Aoka Mizu if no news is forthcoming, worse still another end of the world RNS....

I think likely 90 per cent on board are hired from O&G staff agencies anyway to be honest.

RVF

Not true "ReallyVeryFoolish" the vast majority of the key offshore and onshore people were rehired on a staff basis and were the same staff people who had been given redundancy by Bluewater when the Aoka Mizu left the Nexan/CNOC job.

A few of the key onshore people had been kept on during its complete down time.

In saying that for people with a collection of specific skills both onshore and offshore, I would agree with "Tinderboy" that if other jobs are available then it may be difficult to stay with Bluewater, to be honest my contacts in the industry say it is a bit quiet at the moment.

I do say 5 small consultancies a year in Aberdeen say 15 to 20 days work a year. I have no interest to work any more than that

I have a few jobs lined up in the first quarter but nothing to make me say from my limited view that things are that busy elsewhere.

It takes only a few specialists to leave the job to cause issues with lack of experienced on the team.

[Tinderboy]

The uptime on the AM is 98%, quite extraordinary really given the North Sea industry average is only 84%. Thats down to the people, I don't believe these guys would struggle for work, as you say if a few big hitters leave then this average would plummet in no time at all....

[dspp]

I smell a bond solution & equity wipeout coming closer

27 January 2021 Appointment of Joint Corporate Broker Hurricane Energy plc, the UK based oil and gas company, is pleased to announce the appointment of Investec Bank plc as Joint Corporate Broker with immediate effect.

https://ir.design-portfolio.co.uk/viewe ... P7,T94TZ,1

- dspp