Hurricane Energy initiates own sale process

Hurricane Energy plc said it would begin a formal sale process after receiving an unsolicited cash offer from an unnamed bidder for the company.

INDICATIVE OFFER

The offshore oil and gas company added that the indicative offer of 7.7 pence per share was at a premium of “only 13%” compared with the mid-market closing price of 6.8 pence per share on 1 November 2022.

Hurricane is not recommending the offer to its shareholders but added that its largest investor Crystal Amber Fund Ltd (28.9%) indicated it wanted to “monetise the value of its shareholding”.

SALE PROCESS

The company said it would begin a formal sale process (FSP) to determine whether a better offer is available and one which should be recommended to all shareholders.

Hurricane added that the unnamed bidder was participating in the FSP.

If the FSP failed, the company intends to return up to $70 million (3.1 pence per share) to shareholders in Q1 2023 with possible further payments during 2023 and beyond, if no further favourable offers were made.

BUSINESS VALUE

The company added that it was debt free, with forecast year-end net free cash of $118m and a valuable asset base.

Its material inventory covered drilling, completion and subsea equipment and it has more than $370m of value available in “tax losses”, as at 30 June 2022.

“The board intends to deliver near term shareholder returns through either the successful outcome of the formal sale process or with a substantial capital return programme,” said chairman Philip Wolfe.

“Hurricane is in a strong position with an experienced senior team, robust balance sheet, profitable ongoing production and significant tax losses – a platform capable of supporting distributions throughout Lancaster’s expected economically productive life.”