None too impressed with a debt for equity swap which values their shares at less than 0.1p, 14.7% shareholder Crystal Amber Fund (London CRS) has filed a requisition notice to remove the Hurricane Energy (London HUR US OTC HRCXF) non-executive directors and appoint their own nominees. It’s good news for equity holders and the share price more than doubled last week.
Crystal Amber says there may well have been a failure by HUR’s board to act in accordance with section 172 (1) of the Companies Act 2006, which states that a director must act in a way most likely to promote the success of a company. However, their most damning statement, worth repeating in full, is that “on 14 January 2021, Hannam & Partners published research paid for by Hurricane. It estimated a "risked net asset value" of 10p a share, valuing the equity at £199 million. This assumed an average price for Brent crude oil of $60 a barrel, compared to a current price of approximately $69 a barrel, an increase of 15 per cent. It also predicted that bondholders would be repaid in full. On 10 May 2021, an operational update was provided which stated that its Lancaster P6 well was producing 11,600 barrels per day. In circumstances where it is now said by the Hurricane board that Hurricane has little or no chance of repaying the bonds, there may well have been a failure by the Hurricane board to update market participants with information already shared with Hurricane's bondholders.”
It’s behaviour we’ve seen before at companies such as i3 Energy (London I3E) and one should always remember that the types on these boards tend to put their own and their associates’ interests first. As regular blog readers know well, fiduciary duty to shareholders isn’t a main priority of most London public company directors.
Pantheon Resources (London PANR US OTC PTHRF) announced a resource upgrade on its Basin Floor Fan Complex, which spans both the Theta West project and the Talitha Unit. Pantheon estimates 12.1 billion barrels of oil in place and 1.41 billion barrels of oil recoverable in the Basin Floor Fan Complex. Given discoveries at Talitha #A and previously at Pipeline State #1, PANR believes these estimates could be categorized as contingent resources. Another Alaska explorer touting huge resource numbers, 88 Energy (London & ASX 88E US OTC EEENF), announced a new presentation available at https://clients3.weblink.com.au/pdf/88E/02376906.pdf It’s actually well worth reading. More on 88E EEENF in the private blog.
Rockhopper Exploration (London RKH US OTC RCKHF) announced final results for the year ended 31 December 2020. There’s a $222.6 million one-off non-cash impairment, based on a decision in line with the Sea Lion operator, to write off the historic exploration costs associated with the resources which will not be developed as part of the Sea Lion Phase 1 project. On the brighter side, Rockhopper are targeting completion of the Navitas farm-in, plus the outcome of the Ombrina Mare arbitration, in which they’re seeking significant monetary damages, is expected in July 2021. Year end cash was $11.7 million.
However, the warning is there for those who read further and there are a number of downside scenarios stated in the announcement, including the farm-out to Navitas Petroleum (Tel Aviv NVPT.L) not proceeding and the heads of terms lapsing, the Sea Lion project not achieving sanction (which could be due to a number of factors including funding not being achieved), or Premier Oil (London PMO US OTC PMOIF), now Harbour Energy (London HBR US OTC HBRIY), deciding to withdraw from the Sea Lion Development, which could ultimately result in relinquishment of the acreage. In these scenarios the Sea Lion project would need to be wound down, including the decommissioning of assets in the Falklands, and Rockhopper would be liable for its share of these project wind down costs with no funding support from Premier and/or Navitas. RKH has sufficient financial headroom to meet forecast cash requirements for 12 months, but there is a material uncertainty which may cast significant doubt on Rockhopper's ability to continue as a going concern.
Better news from Tower Resources (London TRP US OTC RTWRF), which announced a Cameroon update. Tower has now received formal confirmation from the Minister of Mines, Industry and Technological Development of an extension of the First Exploration Period to 11 May 2022, allowing TRP to proceed with finalising a schedule for drilling and testing the NJOM-3 well. More on Tower Resources in the private blog.
Finishing on the comedy side, ADM Energy (London ADME Frankfurt P4JC) revealed its second fake sheik. It turns out that “His Excellency” Mr Zubair Al Zubair is not quite as described and the title “relates to social and cultural adoption rather than it having been awarded in connection with a senior governmental, or such other, position.” Perhaps it’s now time for some changes here.
In the private blog this evening, ADV IOG DELT PRD LBE 88E EEENF AEX AEXFF TRP RTWRF PVR PVDRF LOGP and HUR HRCXF (but please note that commentary on all of these is not necessarily positive). Further on that at https://www.oilnewslondon.com/oilman-jim
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The author may hold one or more investments in one or more of the companies mentioned so this post cannot be viewed as independent research. This post does not constitute investment advice or a recommendation to buy or sell and may be incorrect or outdated.