The largest shareholder of Hurricane Energy (LON: HUR) has moved to oust the operator’s management team, including the chairman and CEO.
Crystal Amber Fund, which owns nearly 30% of the West of Shetland oil developer, said Hurricane Energy would be “better served under new management”.
As part of the coup, the firm intends to appoint two new directors; Tony Buckingham and Franco Castelli, respectively CEO and Managing Director of Jersey-based Albion Energy which was sold to a Qatari investor in 2014.
Crystal Amber has requisitioned a general meeting to vote on the proposals.
READ: Tony Buckingham: The ex-mercenary oil baron nominated for Hurricane Energy board
Alongside CEO Antony Maris and chairman Philip Wolfe, the fund aims to remove Richard Chaffe and its own nominees David Craik, John Wright and Juan Morera.
The latter three, it said, was not a reflection upon their performance but to maintain Hurricane’s “independence”.
Sales process getting ‘excellent traction’ says Hurricane
The move comes after Hurricane Energy announced in November that it had received an “unsolicited offer” for the business, which it did not proceed with and instead launched a formal sales process (FSP) in search of a better deal.
That’s despite Crystal Amber Fund saying that original deal should have been taken.
Hurricane went on to say, on November 18, that “multiple” parties were interested in the sales process, though nothing has yet materialised on that front.
In a statement today, Crystal Amber Fund said that “in the continuing absence of a firm offer that reflects the value of Hurricane, it would be better served under new management that has a track record of delivering for shareholders”.
It added that it has been informed by Albion there remains “substantial potential” within Hurricane’s acreage and that “under the right leadership, Hurricane could attract significant new investment to fund growth opportunities”.
In response, Hurricane Energy said it is “considering the content” of the notice and will issue a further announcement later.
On the formal sales process, management said it is “progressing well” and all participants have been asked to submit bids by January 7 2023.
Chairman Philip Wolfe said: “Given the excellent traction we are seeing in the FSP, which the Company commenced to explore all options for shareholders and to fulfil Crystal Amber’s goals, the decision to issue the Requisition Notice at this point is simply mystifying.”
Coup d’état
The fund also pushed for the granting of a total of 15% of Hurricane’s share capital to Albion.
Crystal Amber Fund has frequently been at odds with the management of Hurricane, moving in May to oust five directors claiming they had “failed to protect” shareholder interests.
Hurricane reshuffled its board as a result.
The fund was also at the heart of an extraordinary general meeting last year which ultimately saw five non-executive directors abandon ship before votes were cast on their positions.
‘No further growth potential’
All of this comes as Hurricane, once a troubled operator, has benefited from higher oil and gas prices, becoming “cash rich” with pre-tax profits of $62m for the first half of 2022.
However, its pipeline for growth is unclear.
Crystal Amber cited the firm’s recent “failure” to secure regulatory approval for the P8 well at its flagship Lancaster field in the West of Shetland, which is due to cease production in 2025.
It means Hurricane has “a cash rich and cash generative ‘orphan asset,’ with no further growth potential”, according to Crystal Amber.
New blood?
As part of its arrangement with Albion, Crystal Amber Fund said that, if it accepted a cash offer for its shares on or before April 30 2023, it would give Albion “an option” over 20 million Hurricane shares at 7.7pence each.
As well as being CEO of Albion, Crystal Amber said Tony Buckingham founded Heritage Oil which was acquired in 2014 for $1.6bn – another firm bought over by Qatari investment.
Mr Buckingham and Franco Castelli have agreed to act as directors.
Crystal Amber said it is supportive of Hurricane’s intention to return $70m to shareholders in Q1 2023 in the absence of an offer for the firm.
It said it woud expect “any new board of Hurricane to honour this commitment”.