Posted by Malcolm Graham-Wood - Malcy's Blog
As the half year ends the oil price has had a bad period, around 15% off for both WTI and Brent and forward months are not expecting much movement. With the extra crude from the USA, Libya and Nigeria likely to continue (although Mr Hamm thinks that sub $50 is uncommercial) there will not be a huge dent in the supply/demand situation. Having said that, global demand is certainly enough to take up most if not all of the Non-Opec production increases and provided the agreement holds then stability should remain.
Thank goodness, what has been done cannot be undone as somebody once said and the long awaited raise from Hurricane has been done and done very well. To complete a $300m equity raise and a $220m+ convertible raise in this market is nothing short of incredible and should cover everything including the FPSO upgrade and the sub sea installations. No point in crying over spilt warrants as the market has clearly endorsed the strategy, overwhelming value in the company and Dr Trice's dream, there may be short term weakness owing to the dilution but the portfolio has much to return.
There is no farm-out here but none was needed although some avaricious analysts on the conference call were clearly expecting some big guns to be wheeled out. HUR can run this process very much on their own, if necessary all the way through to first oil which is not far away in 1H 2019 and keep their 100% and operatorship until nearer then. Having said that we know that the data room has been ‘very active' so with a strong hand the buyer should be forced to pay up. Next up, after shareholder approval is the FID which is now a formality and then comes the CPR on Lincoln and Halifax, probably by the end of this year. I am expecting that this will be positive in terms of the whole portfolio and the data that is being collected from 265 days of drilling and four back to back wells is assessed. The company are keen to de-risk the Lincoln and Halifax resources and that is taking time but eventually the Greater Warwick area and Greater Lancaster area will be the backbone of Hurricane.
Whilst I accept that this dilution will inevitably create some how you say, price indigestion, as we head towards the FID, CPR and eventually EPS the value in the company will out. I have no hesitation in suggesting that Hurricane will be a major player in the UKCS for a very long time and that 32p will one day look extremely cheap. More later…
Velocys has at long last achieved the milestone of its first finished products at the ENVIA GTL plant, this is a key milestone in its journey and now that premium Waxes, Diesel and Naphtha have been produced there is much upside.
Andes Energia has confirmed that it is in discussions with Mercuria Energy Group that would be a RTO under Aim rules.
In haste…ie I may have forgotten something!
Tomorrow is make or break day for the Lions and I commented yesterday on the selections of the coach ahead of his next game of Gatball, we shall see.
Tomorrow is the final of the One Day cricket at Lords and Surrey take on Notts in what we hope is a better final than last time…
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