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Hurricane Energy (HUR)

Dod101
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Re: Hurricane Energy (HUR)

#339786

Postby Dod101 » September 11th, 2020, 10:08 pm

Foritza wrote:Today has been for many a wake-up call to question everything you are told in companies you are invested in. I have to hand it to the posters on here who have seen through the bs and offered an "alternative" view.
From today's 2pm presentation I was astounded to hear them talk of samples taken during drilling that determined owc that had "more than 90% water content" and from that the owc was determined. As a layman I found that strange on 2 levels. Firstly, from memory this is the first I've heard of this "evidence" and secondly this water/oil ratio seems a little vague as to determine owc. Is this normal parlance in the oil business?


I know nothing of Hurricane and do not understand the phraseology used here. All too technical for me but what it seems to have demonstrated once again is that we need to invest only in companies where we know or think we know the culture, in other words which ones you can trust and which not. That applies universally whether you are investing in Hurricane, Unilever or say Henry Boot. I assume that those writing and analysing the stuff about Hurricane have some industry knowledge but it is all trying to second guess the Directors. If the culture is right you do not need to do that; you should be able to trust what they are telling you and if not, then run a mile.

These are 'soft' issues but vitally important, much more important than analysing debt levels or the state of an oil well or whatever. Maybe it is in the nature of an oil explorer that you cannot do that, I do not know.

Dod

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Re: Hurricane Energy (HUR)

#339832

Postby Dod101 » September 12th, 2020, 10:43 am

ReallyVeryFoolish wrote:Dod101, we will never know the truth about Trice and Hurricane Energy. I would love to understand how such a promising project led by a supposed world authority can unravel so catastrophically, so quickly. I doubt Trice will ever work in the industry again. I know from experience how ruthless it is.

RVF

PS - Having said that, my loss on HUR is dwarfed by my losses this year on UK income stocks.


Thanks. I am not trying to be wise after the event (nor even before it!) My comments are intended simply to outline my beliefs when I am picking a share to buy. I strongly believe in company culture and my impression is that for the smaller oil explorers, it is almost bound to be a bit rough and tumble. It seems to be the nature of the beast and I assume that those who invest in those enterprises are well aware of that. Taking risks is of course how to make (and lose!) money.

Dod

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Re: Hurricane Energy (HUR)

#339862

Postby dspp » September 12th, 2020, 12:14 pm

ReallyVeryFoolish wrote:
Dod101 wrote:
ReallyVeryFoolish wrote:Dod101, we will never know the truth about Trice and Hurricane Energy. I would love to understand how such a promising project led by a supposed world authority can unravel so catastrophically, so quickly. I doubt Trice will ever work in the industry again. I know from experience how ruthless it is.

RVF

PS - Having said that, my loss on HUR is dwarfed by my losses this year on UK income stocks.


Thanks. I am not trying to be wise after the event (nor even before it!) My comments are intended simply to outline my beliefs when I am picking a share to buy. I strongly believe in company culture and my impression is that for the smaller oil explorers, it is almost bound to be a bit rough and tumble. It seems to be the nature of the beast and I assume that those who invest in those enterprises are well aware of that. Taking risks is of course how to make (and lose!) money.

Dod

Absolutely correct. The HUR story was all about Trice who appeared to have impeccable references from a long career. Hence why it would be extremely interesting to learn what has actually happened. We'll never know. But I am certain Trice won't ever hold a position of responsibility again. What have I learned? Never buy an AIM share with a supposedly fantastic future based on one guys say so, no matter how eminent.

RVF.


In my opinion a great deal of the early HUR story was a good lesson in how to go about data-driven objectively-based exploration, then a rational response to their findings, leading to a rational set of decisions in a particular set of circumstances, that in turn led to the EPS on Lancaster and the farmout to Spirit on Lincoln/Warwick. As with all small E&P companies there is/was a considerable amount of luck involved given the small sample sizes that limited $$$ allows in the exploration game, and as always in early stage reservoir investigation there are more uncertainties and alternative hypotheses than there are knowns. My personal view at the time was that once they had sufficient evidence to proceed with the EPS then it was a reasonable investment with an understandable downside vs upside. For sure there were clearly understood differences of opinion regarding how to assess the data, but there did not seem to be any debate as to the veracity of the data itself and the extent to which it was being presented in a reasonably balanced way. Where I was blindsided was that there was apparently a certain amount of cherry picking of the evidence going on even at that stage, though I have not gone back and done a forensic analysis of this (however I think you will find that Nimrod has a much firmer view on this than I do, and to his credit had even at the time). However that meant that I was not being as alert as I probably should have been, to the possibility that cherry picking might be going on and indeed continue through the early EPS (and LinWar) period. I had mistakenly formed the view that HUR were being absolutely straight with the evidence as it was coming in. In retrospect I now know that was absolutely not the case - they were in fact a) not putting all the evidence through; b) delaying release of evidence; c) alluding to the presence of evidence that did not in fact exist at all, d) possibly (not sure on this) deliberately interpreting evidence in an 'unusual' way. That led - in my opinion - to the situation where anybody with a seat on the board (or access to the information that came via those pathways, or indeed via other pathways) could act in ways that were legal during open periods, even though they could of course not trade on it during closed periods. That information asymmetry, and honesty asymmetry, was something I was insufficiently alert for on this occasion because I had, erroneously, formed a view that they were being straight with the data. I have previously been on the buy-side team of farm-ins to not dissimilar situations, and I have seen (ie. detected, and alerted about) some very tricksy behaviours, so I ought to have been even more twitchy than I was, and regrettably I was not, and that was my own doing and my own error. One can point to both 'technical' subsurface matters in this respect, but also to equity/bond financial/legal matters, and ultimately both have been consequential.

Regarding the cultural debate that Dod raises, I a) don't think that the lower-level people in HUR are/were anything other than good people, and b) I only think that this issue was an issue in some 'departments' of HUR, for example I think that the operations team has executed extremely well. Likewise my opinion is that the finance team have done better than many people think. I would need to do a forensics job to be sure of where exactly the problem I am describing originated from, and frankly I don't think I would ever gain the necessary access to the evidence to be sure, as really one would need to sight the board papers. Therefore whilst I agree with Dod that culture does matter, this may be a case of a few bad apples, as it seems to me that the generality of the HUR culture was pretty good. Unfortunately those bad apples seem to have been located at the wrong place in the barrel.

Messianic apples fixated on a mission can go very badly wrong indeed, especially in organisations/industries that are used to being 'tight' with compartmentalised stovepiped information streams.

regards, dspp

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Re: Hurricane Energy (HUR)

#339929

Postby thehaggistrap » September 12th, 2020, 5:41 pm

I think in many ways it was a perfect storm... Though I don't think we will ever get the "truth". Whilst Dr Trice might be misguided I don't have any reason to believe he was dishonest or motivated by financial gain. Rather he was victim of circumstance and confirmation bias (exactly like many investors). Indeed one of my reasons for investing in Hurricane is that the company appeared to be technically motivated with honest management team.

It seems to me the wheels probably started falling off the bus very quickly round about January 2020? With benefit of hindsight there were a few clues before this - but nothing obvious for PIs. It wasnt until Lincoln Crestal well was a dud and water % started rising in Lancaster that I though something *might* not be quite right. Trice probably caught like rabbit in headlights as events rapidly unfolded around him.

Prior to that point it appeared that everything was going well. Company had raised a huge amount of equity. CPR looked good. Spirit energy were on board. BP were taking the oil. At 60p there were even rumors of entry to FTSE250. Hurricane was very much a darling of the AIM market and appeared to be going places. I for one was sitting on massive paper profit for all of last year. Operationally the company appeared to be delivering on its potential.

I knew the EPS was risky - but based on evidence available I didn't think for a minute it would go this far south. Reserves reduced by 90% from the 2017 CPR is an astonishing decline! Turns out Lancaster isn't even a fractured reservoir but primarily a sandstone flank! Fair play to @dspp - he started highlighting the problems back in January (and I was initially cynical). My biggest regret is not selling out at 30p when I could have escaped at break-even. In hindsight the company not testing the 7Z well for the first 5 months of EPS should have sounded alarm bells. Once the price dropped below 20p I knew there were serious problems - but held on until Friday in naive belief that surely company would find some kind of solution that meant Hurricane was worth "something" (20p) rather than nothing (sub-5p). Like many became emotionally attached to the share / story after the exhilarating ride up to 60p. Previously holding onto shares, rather than selling at a loss, has always done me proud. Not this time - would be embarrassed to admit how large my loss is....

FWIW : I don't think the new board are entirely innocent even though this wasn't a mess of their making. Kerogen have seat on board. They have known of issues for a very long time. They haven't sold a single share in recent months. Have they manipulated share price lower? They can then hoover up shares at 3p and average down from their current average (apparently 15p). Hurricane could then be sold on cheap (say 10p) in autumn allowing Kerogen to break even on their longer term investment gone wrong. Someone has been hoovering up shares on Friday at 3p.

I don't trust the new board. Investor Relations (Phil Corbett) assured me over phone the August shut down was entirely related to Aoka Mizu. He wouldn't however put this in writing by replying to email. I found from yesterdays RNS this was a bare faced lie. Do not trust them!

My belief is that things are certainly bad. But perhaps not quite as bad as the last kitchen sink RNS? Which then makes me question motivation of new board and the people behind them. Wouldn't be surprised to see company sold for 8-10p before xmas? Though given the roller-coaster ride of up and down since 2014 I am happy to be out.

Might stick to tech-funds / unit-trusts and shares like BP from now on!

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Re: Hurricane Energy (HUR)

#339965

Postby Nimrod103 » September 12th, 2020, 11:16 pm

The problem goes right back to the nature of the reservoir. Fractured reservoirs are 'difficult', all experienced reservoir engineers and geologists know that, and they should have been on their guard. The one fractured reservoir which has surprised on the upside, is offshore Vietnam, but there are in detail significant differences between those fields, and Lancaster. So the CPR should have described the obvious risks, but it didn't. In particular, there were no proper cores taken I believe, and the test data was not critically appraised. The big risk on the oil in place was not adequately described.

Where I struggle, is that these issues will have been well understood by the experienced team of Trice, Kelly and the various ex BP bigwigs who were on the Board. Yet they charged onwards. One wonders if another characteristic of fractured reservoirs - they can flow at very high oil rates initially, until the water hits - would have given them a chance to sell out at the top. Unfortunately, the water hit a bit quicker than maybe they were expecting. I have little or no respect for so called business superstars, Woodward being a case in point. Most are over-promoted with feet of clay, and just got lucky a few times.

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Re: Hurricane Energy (HUR)

#340151

Postby dspp » September 14th, 2020, 10:51 am

I managed to listen to the Q&A just now.

I struggle to see any value for equity in Lancaster, beyond perhaps a few token crumbs. The unsaid part of the story is that the business is being run for the bondholders now, as is right, and they will be lucky to recoup anything more than the current bond price (c.40%) as most pathways would lead to tidying away the trainset in about 18-months time is my guesstimate. The only exception is if they could identify some more splinters that can be tied together to give a viable production solution/volumes for another few years using the AM FPSO, and there have to be questions asked in that respect as to whether any sand packages above Lincoln/Warwick might be tied in. Scanty chances of success though and I will be surprised if they can raise the $$$ required. This is very much picking up splinters territory and that is best done by tieing back to lower cost, i.e. fixed jacket, processing infrastructure. In that respect it is almost but not quite close enough to Solan, so perhaps they might try a deal with Solan to try and keep two drunks upright. If so it would be HUR bondholders that would benefit, and PMO, not HUR equity.

The only other thoughts I have are that this continues to suggest investigation of Halifax and the Bader portfolio are worthwhile as exploration plays, albeit with a much more cautious view as to what depth of column might be available. If that is going to be a play worth going after someone will have to crack on with it, as fairly soon (within 5-years imho) offshore exploration is going to go below critical mass, and below critical interest. Again it will not be HUR equity that will benefit, unless very exceptional circumstances come to pass wrt Halifax.

regards, dspp

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Re: Hurricane Energy (HUR)

#340468

Postby dspp » September 15th, 2020, 4:48 pm

ReallyVeryFoolish wrote:A glimmer of hope as Crystal Amber increase their share holding in HUR significantly from 6.25 to 8.3%? Bernstein isn't known for wasting his money, though he has had a few bad investments recently. He has made a lot of money from HUR over the years. Is he about to make more? I wonder.

RVF


edit: RNS at https://ir.q4europe.com/Solutions/Hurri ... d=14811930

Who has the bonds ? Anything being done now is really to protect the bondholders imho. Part of the problem for the last few years has been that smallbeer private investors have not had sight of the bond part of the equation, indeed the actual bonds agreement has never been disclosed, let alone who held them.

regards, dspp

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Re: Hurricane Energy (HUR)

#340476

Postby dspp » September 15th, 2020, 5:09 pm

ReallyVeryFoolish wrote:
dspp wrote:
ReallyVeryFoolish wrote:A glimmer of hope as Crystal Amber increase their share holding in HUR significantly from 6.25 to 8.3%? Bernstein isn't known for wasting his money, though he has had a few bad investments recently. He has made a lot of money from HUR over the years. Is he about to make more? I wonder.

RVF


edit: RNS at https://ir.q4europe.com/Solutions/Hurri ... d=14811930

Who has the bonds ? Anything being done now is really to protect the bondholders imho. Part of the problem for the last few years has been that smallbeer private investors have not had sight of the bond part of the equation, indeed the actual bonds agreement has never been disclosed, let alone who held them.

regards, dspp

Why would Richard Bernstein be worried about third party bond holders? He's looking for another few million profit from HUR stock before the now inevitable end game arrives. Is he not?

RVF


Maybe he has bonds and is trying to protect them ?

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Re: Hurricane Energy (HUR)

#341543

Postby GHHGHH » September 20th, 2020, 6:05 pm

I’m a CB holder and surprised you think we hold such power!

HUR a unique situation, $100m cash in the bank and cash flow positive

CB’s likely to be left with sod all if HUR goes into run down mode. The first FSPO break is mid 2022. Bondholders therefore likely to sanction remedial work if decent CoS.

They will want their pound of flesh for extending redemption - perhaps reduced conversion price or partial early redemptions if sufficient free cash flow.

Ideally CBs would seek a takeover but equity unlikely to like the price and would reject.

CA coughing up £1.2 is very +ve imo. There is no chance that they are protecting CBs!!!

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Re: Hurricane Energy (HUR)

#341570

Postby dspp » September 20th, 2020, 9:07 pm

GHHGHH wrote:I’m a CB holder and surprised you think we hold such power!

HUR a unique situation, $100m cash in the bank and cash flow positive

CB’s likely to be left with sod all if HUR goes into run down mode. The first FSPO break is mid 2022. Bondholders therefore likely to sanction remedial work if decent CoS.

They will want their pound of flesh for extending redemption - perhaps reduced conversion price or partial early redemptions if sufficient free cash flow.

Ideally CBs would seek a takeover but equity unlikely to like the price and would reject.

CA coughing up £1.2 is very +ve imo. There is no chance that they are protecting CBs!!!


Yes, I saw you said you had a fair chunk of the bonds.

HUR have not disclosed the bond terms, just the prospectus. Does it have any covenants in it ?

It would be interesting to know if Kerogen hold any of the bonds. Ditto any other of the major equity slugs.

regards, dspp

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Re: Hurricane Energy (HUR)

#341607

Postby Carcosa » September 21st, 2020, 7:11 am

The Fund finds the conclusions of the technical committee persuasive but not conclusive. Fractured reservoirs commonly exhibit rapid initial pressure decline and we note at Lancaster that the rate of pressure decline has in fact slowed. Moreover, the zone now believed to contain residual oil below the oil water contact is very thick, whereas we would have expected an abrupt change in oil saturation at the free water level. Therefore, the Fund believes that significant volumes of oil may be present below the revised oil water contact at 1,330 metres.

https://www.investegate.co.uk/crystal-a ... 00065012Z/

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Re: Hurricane Energy (HUR)

#341634

Postby dspp » September 21st, 2020, 9:00 am

Carcosa wrote:The Fund finds the conclusions of the technical committee persuasive but not conclusive. Fractured reservoirs commonly exhibit rapid initial pressure decline and we note at Lancaster that the rate of pressure decline has in fact slowed. Moreover, the zone now believed to contain residual oil below the oil water contact is very thick, whereas we would have expected an abrupt change in oil saturation at the free water level. Therefore, the Fund believes that significant volumes of oil may be present below the revised oil water contact at 1,330 metres.

https://www.investegate.co.uk/crystal-a ... 00065012Z/


This is technically possible. For one sort of mechanism the implication is that these would need to be isolated compartments of some sort. Firstly, given the observed/suspected communication across 8km Lancaster-Lincoln through the previously-thought-to-be-sealing Brynhilde fault that would be odd. Secondly if they are isolated then it is one well per compartment with precision targetting to the relevant fracture sets. So I find it odd that CA are proposing this as a motivation. They may well think the company is oversold, but to put this forwards as the motivator is odd to my eyes.

If I was CA I would be asking why not buy bonds at 38% of par, rather than equity.

regards, dspp

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Re: Hurricane Energy (HUR)

#342012

Postby dealtn » September 22nd, 2020, 5:04 pm

ReallyVeryFoolish wrote:Hmmm, fascinating, Crystal Amber picking up their stake to more than ten percent. What do they know?

RVF


Possibly nothing, other than the potential upside is maybe more than buying bonds at 38p in the £.

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Re: Hurricane Energy (HUR)

#342171

Postby dspp » September 23rd, 2020, 10:38 am

"RNS Number : 7933Z Hurricane Energy PLC 23 September 2020

Board changes

Hurricane Energy plc, the UK based oil and gas company focused on hydrocarbon resources in naturally fractured basement reservoirs, announces the resignation, with effect from 23 September 2020, of Dr Alan Parsley, Non-executive Director.

Dr Parsley was Kerogen Capital's shareholder director pursuant to the relationship deed signed in 2016. Mr Leonard Tao has also resigned as an alternate director to Dr Parsley."


This suggests Kerogen have written off HUR.

regards, dspp

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Re: Hurricane Energy (HUR)

#342235

Postby thehaggistrap » September 23rd, 2020, 1:23 pm

^ who know:

either :
1) Kerogen have thrown in towel and selling at 3p
2) Kerogen are, along with Crystal Amber, buying more sharess in anticipation company will be sold for 5-10p.
Could imagine Spirit or Chryasor might be interested if price was right. Current market cap of 60 million is only another 3 tanker loads.

Either way something smells very *fishy*.
No one seems to know who holds the bonds, or why Crystal Amber are now buying more.
Yet again private investors left in the dark and last to know.

An absolute PR disaster from HUR.
Serious questions of corporate governance appearing once again.

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Re: Hurricane Energy (HUR)

#342240

Postby dealtn » September 23rd, 2020, 1:31 pm

ReallyVeryFoolish wrote:
thehaggistrap wrote:^ who know:

either :
1) Kerogen have thrown in towel and selling at 3p
2) Kerogen are, along with Crystal Amber, buying more sharess in anticipation company will be sold for 5-10p.
Could imagine Spirit or Chryasor might be interested if price was right. Current market cap of 60 million is only another 3 tanker loads.

Either way something smells very *fishy*.
No one seems to know who holds the bonds, or why Crystal Amber are now buying more.
Yet again private investors left in the dark and last to know.

An absolute PR disaster from HUR.
Serious questions of corporate governance appearing once again.

Wow. What a perspective. The company is only valued at the price of the next three tanker exports.

RVF


Er, the equity in the company is only worth three tanker exports, surely? The market cap and the value of the company are not the same thing.

(Or have I missed something subtle in your post?)

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Re: Hurricane Energy (HUR)

#342331

Postby Tinderboy » September 23rd, 2020, 6:47 pm

Agree with dspp, they will fire up WI in Q3-21 and roll the dice, if its not happening they will go for disconnect 22-Q2 and fire sale around 22-Q3.
As an outside chance and the WI is positive the morphine may last an extra 6-12 months.
I don't see anyone coming in, the only possible wild-cat suiter may be Ineos, however big big Jim is shrewd and wont enter a deal unless he knows he can win.................

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Re: Hurricane Energy (HUR)

#342377

Postby Proselenes » September 23rd, 2020, 10:02 pm

Hurricane Energy downgraded to Underperform from Outperform at RBC Capital

RBC Capital analyst Al Stanton downgraded Hurricane Energy to Underperform from Outperform with a 1 GBp price target.



https://thefly.com/landingPageNews.php? ... BC-Capital

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Re: Hurricane Energy (HUR)

#342536

Postby thehaggistrap » September 24th, 2020, 2:33 pm

Personally I smell a giant RAT with recent events at Hurricane....
Kerogen commissioned the technical review.
Now it has been published and share price trashed they want off the board.
Presumably so they can either buy or sell shares?

2 possibilities here :
1) Kerogen now want to sell out to Crystal Amber at 3p.
2) Kerogen now want to buy before a cheap take over (5-10p) from Spirit or Chryasor.

Today's director dealing simply adds to the questions.
Things are clearly bad at HUR. But are they actually as bad as made out ?
Or has "kitchen sinking" all the bad news with worst case scenario been a deliberate tactic.
Allow Kerogen / Crystal Amber to average down then sell entire company to first bidder.

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Re: Hurricane Energy (HUR)

#342539

Postby thehaggistrap » September 24th, 2020, 2:38 pm

^ FWIW : I write the above as someone (who like many) has lost a small fortune on HUR.
Currently out but wouldn't be surprised to see company sold for circa 8p pre-xmas.


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