This time last week I had not even heard of Hurricane Energy. Having piled in last Thursday and Friday and had the good fortune to see the share price almost double since then, I now find myself with an unexpectedly (uncomfortably?) large holding in a company which is relatively new to me.

I have tried to get hold of analyst reports and valuations – I think that Cenkos has done some work – but I have not yet succeeded. That being so, I spent some hours last night plodding through the 286 page Prospectus and trying to produce a simple valuation model.

I do not often bother to do this. With companies I know better I tend to rely on published analysis moderated by judgement and instinct; but with a company I do not know very well, and which seems to be under the radar of the analyst community, I have found it useful. If nothing else the results will inform my thinking about the advisability/timing of top-slicing.

No doubt what I’ve come up with is over-simplistic, no doubt it is incomplete and contains errors. But it seems to me to be worth sharing here. I’ll be delighted to get constructive criticism/comments/feedback/corrections and will incorporate them as appropriate.

I have deliberately set out to be conservative in my calculations. What I want to figure out is the value of the low hanging fruit not the stuff growing on the tall branches that reach high up into the blue sky. That will come later.


2C value CoS % risked unrisked
Discoveries awaiting appraisal bbls $/bbl
$ million $ million

Lancaster

200

5

75

750

1000
Whirlwind oil 117 5 50 292.5 585
Strathmore 32 5 50 80 160
Tempest/Typhoon 26 5 50 65 130

total - whirlwind oil case

375


 

1187.5

1875


Lancaster


200


5


75


750


1000
Whirlwind gas 44 5 50 110 220
Strathmore 32 5 50 80 160
Tempest/Typhoon 26 5 50 65 130

total - whirlwind gas case

302



1005

1510

3C value CoS % risked
Prospects awaiting exploration bbls $/bbl
$ million

Lancaster upside

53

5

9

24
Whirlwind upside 51 5

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