Warrant Issue

RNS Number : 9389E

Hurricane Energy PLC

12 May 2017

 

For immediate release: 12 May 2017

THIS ANNOUNCEMENT, INCLUDING THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA, JAPAN, THE REPUBLIC OF IRELAND OR THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL. THIS ANNOUNCEMENT HAS NOT BEEN APPROVED BY THE LONDON STOCK EXCHANGE, NOR IS IT INTENDED THAT IT WILL BE SO APPROVED.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION (EU No. 596/2014). UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA REGULATORY INFORMATION SERVICE THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

Hurricane Energy plc
 

("Hurricane" or the "Company")
 

Warrant Issue
 

Hurricane Energy plc, the UK based oil and gas company focused on hydrocarbon resources in naturally fractured basement reservoirs, announces that it has today entered into a deed of warrant grant with Stifel Nicolaus Europe Limited ("Stifel") (the "Warrant Issue") under which Stifel will be entitled to subscribe for up to 25,000,000 ordinary shares of 0.1p each in the capital of the Company ("Ordinary Shares").

In order to maintain the Company's existing targeted timetable towards first oil in H1 2019 from the Company's Early Production System ("EPS") development at its Lancaster field, West of Shetland, the Company has committed to, and plans to further commit to, certain pre-sanction long lead items, with expenditures to be incurred on a staged basis to the end of Q2 2017.  By committing to these expenditures the Company reduces the risk that key equipment will not be available for installation during the benign weather window in Q2 and Q3 2018.

The Company intends to apply its existing cash resources to cover these expenditures. However, any proceeds (the "Proceeds") arising from the issue of Ordinary Shares pursuant to the Warrant Issue will provide the Company with additional resources and working capital, and importantly preserve flexibility in respect of both the timing and structure of any future fundraising(s) required to fully fund the EPS.  

The Company updated shareholders and investors at its Capital Markets Day presentation on 7 April 2017 on the progress of its drilling programme since the fundraising conducted in October 2016 and the development programme related to the EPS. Investors are referred to that presentation, a copy of which is available on the Company's website, for additional information in this regard.
 

Use of Proceeds

The Company has applied, and intends to continue to apply, its existing cash resources toward certain pre-sanction long lead time items, including commencing work on the FPSO and mooring buoy, ordering the fabrication of key subsea components such as Christmas trees, and undertaking certain geotechnical and geophysical studies in relation to the proposed location of the FPSO.  Commitments have already been made towards some of these items and the Company plans to commit to the remainder during June 2017. The Proceeds, if any, will be applied to provide the Company with additional resources and working capital, and importantly preserve flexibility in respect of both the timing and structure of any future fundraising(s) required to fully fund the EPS.

The Company currently aims to sanction the EPS phase of the Lancaster development towards the end of H1 2017 or early H2 2017 and to achieve first oil during H1 2019 (subject to financing as mentioned below). Hurricane will incur the above mentioned long lead expenditures on a staged basis over the rest of Q2 2017, in line with its targeted timing for full EPS financing and final investment decision ("FID").

As stated in the Company's Capital Markets Day presentation, it is estimated that capital expenditure required to achieve first oil from the EPS, excluding the two horizontal wells which have already been drilled and tested, is expected to be approximately US$467 million. This estimate includes all pre-sanction expenditures including front end engineering design studies, long lead items, project management and time writing to FID.

The Company is considering a range of financing options for the EPS phase of the Lancaster development and currently intends to finance the EPS via a combination of some or all of the following options: equity, deferred vendor finance, debt and debt-related securities and farmout.
 

Details of the Warrant Issue

Pursuant to the Warrant Issue, the Company has issued to Stifel, at nil cost, warrants (the "Warrants") over 25,000,000 Ordinary Shares.  The exercise price under each of the Warrants is 95% of the volume weighted average price of the Ordinary Shares, calculated over the trading day prior to exercise. Stifel will use reasonable endeavours to procure purchasers for the Ordinary Shares issued, if any, under the Warrants.  The Warrants may be exercised in whole or in part by Stifel.

Unless the Company consents to a continuation of the Warrants, the Warrants will lapse on 31 May 2017. If the Warrants are continued they will lapse on the final longstop date of 30 June 2017. In addition, the Company may also, at its election and without penalty, terminate or suspend the Warrants on any Business Day before 30 June 2017, after which date, in the event of a termination, any outstanding entitlement of Stifel to exercise Warrants will fall away.

A block listing application has been made to the London Stock Exchange for the admission to trading on AIM of up to 25,000,000 Ordinary Shares (the "Block Listing Shares"). The application for the admission of the Block Listing Shares relates to the maximum number of Ordinary Shares that could be issued as a result of the potential exercise of Warrants granted pursuant to the Warrant Issue. Block Listing Shares will be issued from time to time pursuant to the exercise of the Warrants.  The Company will confirm total voting rights regularly in compliance with the Disclosure and Transparency Rules. The Block Listing Shares will be issued credited as fully paid and will rank pari passu in all respects with the existing ordinary shares of the Company. It is expected that the block admission will become effective on 17 May 2017.

Dr Robert Trice, Hurricane's CEO, commented: "We are pleased to have issued the Warrants to Stifel, our Joint Corporate Broker. We believe that the structure of the Warrant Issue provides the Company with access to a flexible working capital funding structure which would not be available through other means of financing. We expect that any proceeds raised will help preserve the Company's optionality over the timing and choice of funding route and will strengthen the Company's hand in discussions with counterparties.  This demonstrates the Board's confidence that the Company's work on the EPS development remains on track according to the current timetable."
 

Risk factors
 

The attention of investors is drawn to the risk factors set out in Appendix 1 of the Company's announcement dated on or about 20 October 2016, which provide additional information on the Company's fundraising plans and the risks associated therewith.

The Company also draws the intention of investors to its announcement of today's date and in particular the section thereof headed "Going Concern" in the Directors' Report.

Contacts: 

Hurricane Energy plc	Dr Robert Trice (Chief Executive Officer)/ Alistair Stobie (Chief Financial Officer)	[phone]
Cenkos Securities plc	Nominated Adviser and Joint Corporate Broker Derrick Lee/Nick Tulloch/Beth McKiernan	[phone]
Stifel Nicolaus Europe Limited	Joint Corporate Broker Callum Stewart/Nicholas ARhodes/Ashton Clanfield	[phone]
Vigo Communications	Public Relations Patrick d'Ancona/Ben Simons	[phone] [e-mail]

Market soundings, as defined in the Market Abuse Regulation ("MAR"), were taken in respect of the Warrant Issue with the result that certain persons became aware of inside information, as permitted by MAR. That inside information is set out in this announcement and has been disclosed as soon as possible in accordance with paragraph 7 of article 17 of MAR. Therefore, those persons that received inside information in a market sounding are no longer in possession of inside information relating to the Company and its securities.

This announcement contains certain statements that are or may be deemed to be "forward-looking statements" which are based on current expectations and projections about current events. These statements typically contain words such as "targets", "believes", "intends", "may", "will", "should", "expects" and "anticipates" and words of similar import. By their nature, forward looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance.

Statements contained in this announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future.

The information contained in this announcement is subject to change without notice and, except as required by applicable law or the AIM Rules, the Company does not assume any responsibility or obligation to update publicly or review any forward-looking statements contained herein. You should not place undue reliance on forward-looking statements, which speak only as of the date of this announcement. No statement in this announcement is or is intended to be a profit forecast or to imply that the earnings of the Company for the current or future financial years will necessarily match or exceed the historical or published earnings of the Company.

The price of shares and the income from them may go down as well as up and investors may not get back the full amount invested on disposal of the shares. Past performance is no guide to future performance and persons who require advice should consult an independent financial adviser.

The distribution of this announcement in certain jurisdictions may be restricted by law. No action has been taken by the Company or any of the Joint Corporate Brokers that would permit possession or distribution of this announcement or any other publicity material relating to the Company in any jurisdiction where action for that purpose is required. Persons into whose possession this announcement comes are required by the Company and the Joint Corporate Brokers to inform themselves about, and to observe, any such restrictions.

 

END

 

 

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