Hurricane Energy (HUR)

[dspp]

Looks like the LSE board has finally begun to understand the implications of that e-voice piece Nice rises. dspp

[PeterGray]

I think dspp is referring to this:

http://www.lse.co.uk/ShareChat.asp?shareTicker=HUR

You may be better off not knowing! LSE is a black hole into which time gets sucked and in my experience little of value ever escapes

Peter

[PeterGray]

Hurricane Energy PLC (LON:HURR) for rose 4% to 49.9p

Room for a little improvement in the quality of Proactive's reporting!

[dspp]

RNS out today 17 Jan 18, basically steady progress on corp gov matters towards main market listing
https://www.hurricaneenergy.com/communi ... ws-service
https://otp.tools.investis.com/clients/ ... sid=967286
The most interesting point to me is that there is a legal agreement covering relationships between Ker and Hur. Whether this goes as far as a shareholder agreement might I do not know. Also the Chair bit appears to be progressing, though that is not a concern from my point of view.
- dspp

"'Hurricane Energy plc, ..., provides a corporate governance update, following further progress in the work of the Company's Listing and Governance Committee ("LGC").

The Company previously announced that it was considering application for admission of its ordinary shares to a premium segment of a recognised stock exchange ("Premium Listing"). On the recommendation of the LGC, the Company is therefore transitioning its corporate governance policies and procedures towards best practice, benchmarked against those of a premium listed business. This includes compliance with the UK Corporate Governance Code (the "Code"), a standard not required of AIM-quoted companies.

As announced on 7 December 2017, Spencer Stuart, a leading executive search firm, is working for the Company to source a new non-executive Chairman. This process continues and the Nominations Committee will provide an update once an appointment has been made. Following the Chairman's appointment, the Company will seek to appoint additional independent non-executive directors, such that the Board becomes compliant with Provision B.1.2. of the Code. Such appointments will be made with input from the new Chairman.

To affirm their independence under the provisions of the Code, Dr David Jenkins and John van der Welle have relinquished, for nil consideration, the awards previously granted to them under Hurricane's non-executive director share option plan. The Company confirms that it does not plan to make share incentive awards to non-executive directors in the future. Dr Jenkins is currently acting as Interim Chairman and will therefore only be deemed independent upon appointment of the new Chairman.

The Board has also reconstituted membership of its Audit and Risk, Remuneration and Nominations committees. The updated terms of reference for the committees are available on Hurricane's website, www.hurricaneenergy.com. Upon appointment of the new Chairman, these committees are expected to be compliant with the relevant provisions of the Code and align with best market practice, for a company of Hurricane's size. Corresponding updates have been made to the Relationship Deed dated 18 April 2016 between the Company and its largest shareholder, Kerogen Investments No.18 Limited."

[Carcosa]

I don't pop in this forum all that often in an effort to ignore the hullabalu until something 'solid' happens however I do have a question that perhaps someone can respond to?

Over the years I have seen many investors claim that the share price will move ahead because a company is moving into the FTSE 250 or FTSE 100. Claims that tracker funds have to buy in etc. When the move from one index to another actually happens the share price does not necessarily follow investors expectations...

Would a premium listing offer a genuine opportunity/meet institutional investors desire to allow them to invest in Hurricane? What really stops them from doing so now on AIM? Wouldn't Hurricane just be seen as a speculative share for the next 12-24 months thereby not on the radar of any serious fund manager? I can see the potential benefits for the business i.e. ability to raise further finance somewhat more easily either by equity and/or debt but affect on the share price?... am not so convinced. So can someone really provide a good argument stating why it's good for us private investors?

Thanks
Carcosa

[PeterGray]

Carcosa,

I think the moves being discussed are very important to the future of the company, and to investors in the company. All the signs are that HUR has the potential to be far too large not to be properly regulated and listed on the full list. So I welcome the moves they are making.

However, I would agree that a full listing, and possible entry to the FT250, is not inevitably going to produce a large change in investor base, sentiment or SP (though nor is it impossible!). But it will open up investment in the company to a number of institutions and funds who cannot not currently invest. That clearly doesn't mean they are queuing up to do so, but it allows a shift to a different, and wider, shareholder base in the future, which may have benefits for existing holders.

The other thing it will do, of course, is open up avenues of fund raising that do not currently exist. That could well prove useful and increase the range of potential development scenarios for the GLA/GWA, but it may also tell us something about what HUR management are thinking about the future. Had they been intending to sell up the whole project, as they were apparently at one time, then the reasons for going for a full listing would not be so obvious.

Peter

[dspp]

I don't pop in this forum all that often in an effort to ignore the hullabalu until something 'solid' happens however I do have a question that perhaps someone can respond to?
.......So can someone really provide a good argument stating why it's good for us private investors?

Thanks
Carcosa

PRO OF MAIN MARKET
* can be invested in by active funds who have a 'main market only' limitation (a lot of them)
* must be invested in by passive index trackers
* tends to be a steadier investor profile
* gets out of AIM where day traders & rampers & general low-life abound ( )
* sign of good governance

CON OF MAIN MARKET
* costs more to be there (governance overheads)
* off AIM so CGT liable
* unavailable to AIM trackers and funds

Feel free to add to the list.

regards, dspp

[Carcosa]

Many thanks for the rapid replies; I am particularly aligned to Peters' way of thinking.

Over the years I have not really seen much change in the share price of a company when it enters a premium listing that could arguably have not been expected anyway given the same company newsflow. Short term there is often a positive response but that often peters out rather quickly. Thispaper here concurs with my personal experience. i.e. short term good, medium term irrelevant.

Thanks all.

[PinkDalek]

CON OF MAIN MARKET
..
* off AIM so CGT liable
...
Feel free to add to the list.

regards, dspp

Are potential amendments okay?

I think you are talking about IHT Business Relief on certain unquoted securities.

[dspp]

CON OF MAIN MARKET
..
* off AIM so CGT liable
...
Feel free to add to the list.

regards, dspp

Are potential amendments okay?

I think you are talking about IHT Business Relief on certain unquoted securities.

Very happy to amend (provided I annotate to that effect) if there is good reason to do so. I personally am not that au fait with AIM and indeed do my best to have any money there. I made an exception for HUR. However on AIM there do appear to be some CGT advantages (see https://www.londonstockexchange.com/com ... nefits.pdf) . I don't think IHT Business Relief is as widely available via AIM, or as relevant, or am I missing something ? This really is not my area of expertise .......
regards, dspp

[PinkDalek]

CON OF MAIN MARKET
..
* off AIM so CGT liable
...
Feel free to add to the list.

regards, dspp

Are potential amendments okay?

I think you are talking about IHT Business Relief on certain unquoted securities.

Very happy to amend (provided I annotate to that effect) if there is good reason to do so. I personally am not that au fait with AIM and indeed do my best to have any money there. I made an exception for HUR. However on AIM there do appear to be some CGT advantages (see https://www.londonstockexchange.com/com ... nefits.pdf) . I don't think IHT Business Relief is as widely available via AIM, or as relevant, or am I missing something ? This really is not my area of expertise .......
regards, dspp

I know little of Hurricane itself and yes there are some potentially beneficial CGT aspects of holding shares in unquoted trading companies (including AIM) such as holdover relief on gifts but, despite being aware of the contents of the RSM Guide, there is nothing that says AIM holdings are CGT free.

A more from AIM to a Main Listing (or another disqualifying listing) would, as I've suggested, impact on the availability of IHT Business Relief and impacted shareholders would need to reinvest elsewhere to maintain the Business Relief.

There's a lengthy and more detailed thread on IHT Business Relief at Taxes (there are plenty more than that one), if you or anyone else is interested:

viewtopic.php?p=49273#p49273

[PeterGray]

There was a time when the CGT taper arrangements existed that AIM shares had CGT advantages, due to tapering more quickly and I think further. Those advantages no longer exist, as the taper system has gone.

Most AIM companies, and an E&P like HUR should qualify, are IHT exempt - which is the main tax advantage of AIM shares currently.

Peter

[NigWit]

There’s a short piece in the Scotland Business pages of today’s Times about the governance issues at Hurricane. I hope yesterday’s RNS signifies adequate change on this matter of serious concern.

I’d post a link but the app won’t let me. Subscribers will be able to find it.

[IronPyrites]

Hi Peter

Most AIM companies, and an E&P like HUR should qualify, are IHT exempt - which is the main tax advantage of AIM shares currently.

They are only IHT exempt if held for 2 years.

Regards
Iron

[dspp]

I am properly corrected on the IHT and CGT aspects, thank you all.

The other AIM aspect that has occurred to me is that AIM is exempt from stamp duty.
http://www.londonstockexchange.com/trad ... mption.htm

Which is another reason why a particular group of day trader types prefer it. Though I accept that many of these have moved on to spread bet etc, a rump of them remain.

regards, dspp

[NigWit]

http://investors.morningstar.com/owners ... ountry=USA

It looks to me that the recent buying was a by a US-based fund called Virginia College America Small Cap who have acquired a holding of 68 million shares or 3.49% since 31 December 2017.

[dspp]

RNS today https://www.hurricaneenergy.com/communi ... ws-service

https://otp.tools.investis.com/clients/ ... sid=970324

Hurricane Energy plc, the UK based oil and gas company focused on hydrocarbon resources in naturally fractured basement reservoirs, announces that it received notification on 25 January 2018 that, following payroll contributions made on 25 January 2018, Global Shares Trustee Company Limited ("SIP Trustee"), trustee of the Hurricane Energy plc Share Incentive Plan ("SIP"), awarded 474,006 ordinary shares of £0.001 each in the Company ("Ordinary Shares") to participants in the SIP at a price of 38.86 pence per share, being the closing mid-market price on 24 January 2018.

The SIP award has been partly satisfied by the issue of 341,301 new Ordinary Shares to the SIP Trustee at a subscription price of £0.001 per share, being the nominal value of the shares.

Each participating employee will receive an allocation of Partnership Shares (being shares acquired at market value using contributions deducted from employees' pre-tax salaries; "Partnership Shares"), Matching Shares (being ordinary shares of twice the number of Partnership Shares acquired by an employee which are paid for by the Company; "Matching Shares") and Free Shares (being ordinary shares to a value not exceeding £3,600 in the current tax year, which are paid for by the Company; "Free Shares").

...Application has been made for 341,301 new Ordinary Shares to be admitted to trading on AIM. Admission is expected to take place by 31 January 2018. The shares will rank pari passu with the existing Ordinary Shares.

Following the SIP awards, Hurricane's total issued and voting share capital will comprise 1,959,551,637 Ordinary Shares. This figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, securities of the Company.

[note by me: The 1,959,551,637 Ordinary Shares is not the fully diluted number. I have estimated that in a past post, which of course now needs slightly updating and which I'll do idc]
- regards, dspp

[dspp]

G&G conf presentation
http://38559b81a8bdc9f7a43e-61cdd80dc1a ... Energy.m4v
I've not had a chance to listen yet, 40 mins, thanks to Greenmachine on LSE-HUR board.
- dspp

[dspp]

again thanks to GreenMachine on LSE-HUR board here is the pdf
http://38559b81a8bdc9f7a43e-61cdd80dc1a ... Energy.pdf

- dspp

[dspp]

I have now had a chance to listen to RT's talk and the Q&A subsequent. My core-experience is near-wellbore onwards, but I am not ignorant of further back along the chain towards G&G. As with everything else from HUR regarding these 5 Rona Ridge reservoirs I cannot detect any significant flaws in the reasoning and the data gathered and presented to date. Indeed I am very encouraged by the professional reservation re the limits of what the data says. The talk filled in the odd tech gap for me, but nothing dramatic. Overall I continue to be encouraged and do not see any additional asset-level risks; indeed I am slightly happier than I was before after listening to some of the detail re the fractures/joints/whatever vs some other experiences I have had.

I recommend anyone who is putting serious money into this (which is a number that is very dependent on your individual circumstances) to listen carefully to this talk (and Q&A), and similarly read and listen to all else. Basically if you cannot understand it (*) you should not be punting here. It could all go pear-shaped when put to long-term test, and that is without taking into account the company-level risks that should also be taken into account. At the end of the day this is still an unproven expensive hole in the ground story stock.

Re test EPS duration my interpretation is that it is not until after initial stabilization, and then interference testing, that they think they will have sufficient info to home in on FFD solutions (and I would concur with this). By which time I also expect them to have 3-4 other wells and well-tests in hand. Unless someone(s) have pulled the trigger on them first. No-one forced an answer on that duration out of them but I expect not 6-years, but not 6-months either, perhaps 6 months to get to stabilisation; and then 6-months more to do the interference tests and to do a quick-look on the results. (has anyone got the info on what the down-hole gauge situation is; or will that require a re-entry; or what ? - this affects timing).

Is there a list of all the talks at this and similar conferences ? I detected there was a Clair one and I would like to listen to that and others that are relevant in this context. Please excuse me for asking but this is not my day job area these days, and so I don't know where to quickly go looking.

*** As always please remember everything I say may be wrong / criticise anything I have said so I can learn the error of my ways/ do your own research / make your own decisions / don't blame me. ***

regards, dspp

* well, at least 95% of it


[edit: see slide 21 of http://38559b81a8bdc9f7a43e-61cdd80dc1a ... isefin.pdf which was the ERC presentation in this conference. It is unusual to see a 4% porosity fractured reservoir. They are either >4% or <1%. Hence one of the Q's to RT, which was answered by RT with (my words) "that is what the data shows" .... so far. Much to be learned.]