Proactive Investors - Hurricane Energy PLC today released a ‘shareholder Q&A’ statement addressing a number of questions about the nature of the recently concluded formal sales process and the board’s decision to sell the company rather than pursue its proposed acquisition strategy.
Today, in the Q&A document, the UK offshore oil producer clarified that it had received five ‘actionable offers’ from a sales process that initially engaged twelve interested parties “in a meaningful manner”.
Hurricane added that the Prax offer, announced a week ago, was the best deal available and suggested it would be final given that it was ‘the outcome of a comprehensive formal sale process’ and Prax believes it is “fair and reflective of the value of the assets.”
The takeover offer is loaded with contingent value on top of an upfront £16.5mln payment and a £66mln special dividend out of Hurricane’s existing cash. Depending upon how much is paid out through future contingent payments the total ‘deal value’ would be range from £82.7mln and £249mln.
Hurricane owns the Lancaster oilfield in the West of Shetland region, offshore UK, which was producing just shy of 10,000 barrels of oil but is declining (presently it is yielding 7,700 bopd) and has been troubled by water cut problems that reduced the number of producing wells down to one and those issues continue to constrain oil volumes.
Hurricane was last year able to clear its convertible bond debts thanks largely to soaring crude oil prices, and, subsequent production has allowed management to build a kitty for acquisitions.
The sale process was triggered as Hurricane’s private equity backer Crystal Amber sought to exit its position in the company and it previously told Hurricane that it would not support the board’s proposed acquisition strategy - which sought to use Lancaster’s remaining cash flows to support deals to build up a portfolio of other production assets.
Hurricane last week described itself as ‘pleased’ with the outcome of the sales process, with chair Philip Wolfe commenting “The Hurricane board believes that the acquisition will deliver more cash than Hurricane Shareholders are likely to have received from Hurricane's Lancaster oil field, on a much-expedited timeframe, as well as mitigating the risks associated with production from a single well development.”
Today, it published the Q&A which spanning some 44 questions sought to provide further insight to its shareholders.
The Q&A can be read in full here.
Prax is a privately owned oil and gas company with an array of assets in the UK including refining, marketing, and distribution of commercial fuels. It operates the Lindsey oil refinery in Lincolnshire and provides around 15% of the UK’s refining capacity.