Aoka Mizu FPSO; Source: Hurricane Energy

Hurricane sees takeover bid as ‘fair and reasonable’

UK-headquartered oil and gas company Hurricane Energy has advised its shareholders that the terms of the takeover offer, which were received from Prax Exploration & Production, are in their best interest.

Aoka Mizu FPSO; Source: Hurricane Energy

On 16 March 2023, Hurricane revealed that it had reached an agreement on the terms of an acquisition of the entire issued and to be issued ordinary share capital of Hurricane by Prax for approximately £249 million. Following this, Prax has received irrevocable undertakings or a letter of intent in support of the acquisition from Hurricane shareholders representing 47 per cent of Hurricane’s issued share capital in aggregate.

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In a recent update, Hurricane confirmed that Prax would not increase the financial terms of the acquisition while highlighting that independent proxy advisory firms had recommended shareholders to vote in favour of the acquisition. As Prax considers the financial terms of the acquisition to be “full and fair,” Hurricane explains that these terms are final and will not be increased.

However, Prax reserves the right to revise the financial terms of the acquisition where there is an announcement of a firm intention to make an offer for Hurricane by any third party or the Panel otherwise provides its consent.

“If, on or prior to the effective date, any dividend, distribution, or other return of value, other than the special dividends, is declared, made, or paid or becomes payable by Hurricane, Prax will be required to reduce the cash consideration payable under the terms of the acquisition for the Hurricane shares by an amount equal to the aggregate amount of such dividend, distribution or other return of value,” elaborated the UK player.

Furthermore, Institutional Shareholder Services (ISS) and Glass, Lewis & Co. (Glass Lewis) have both issued recommendations supporting the acquisition, advising their institutional shareholder subscribers to vote in favour of the resolutions necessary to approve this. 

Antony Maris, Chief Executive Officer of Hurricane, commented: “Hurricane’s board continues to believe that the terms of the offer are fair and reasonable. We are very pleased to note the recently announced endorsements of the recommended acquisition by leading corporate governance advisors, ISS and Glass Lewis, which are in line with the irrevocable commitments of support from the company’s two largest shareholders.

Moreover, Hurricane holds a 100 per cent operated interest in the Lancaster field, which is in its first phase of development with an Early Production System (EPS) consisting of two wells tied back to the Aoka Mizu FPSO vessel. The first oil was achieved in June 2019. The company underlines that at least 495,000 barrels of oil are available for lifting in the FPSO as of 23 April 2023.

According to the UK company, the next lifting is scheduled for later in April. As significant delays to the lifting are likely caused by either weather or other extreme circumstances, the firm’s directors believe it is highly probable that the full £37.2 million will become payable under the acquisition, either via the supplementary dividend or via the DCUs. 

This proposed transaction is in the best interests of our shareholders and we look forward to updating shareholders on the progress of the recommended acquisition in due course,” added Maris.