Updates On Two FTSE AIM 100 Index Stocks – BUR and HUR

Burford Capital Limited

Burford Capital Limited (BUR) is a Guernsey-based Investment company, focused on providing finances to the legal market. The company has two segments – Business Solutions and Law Firm Solutions. Through its business solutions, the company operates with businesses of all sizes, from start-ups to Fortune 500 companies to manage legal cost and risk by funding litigation and taking the legal expenses off their balance sheets. Through its law firm solutions segment, the company provides capital to law firms. The company provides capital funding to law firms in order to achieve their desired growth with greater flexibility in terms of availability of capital. The company’s major products and services include Commercial Litigation Finance through which it provides capital to law firms as a result of which, all seemingly successful litigation can move ahead with the risk and cost of litigation lying with Burford, Portfolio and Complex financing, a product through which it provides flexible financing to target complex needs of the client in tactical ways, Risk management and insurance, a service which allows the clients to manage risk and shift it from the business to a third party as well as niche services like providing finances for international arbitration which is a unique service and allows to get third party financing for the purpose of international commercial arbitration. The company also specialises in financing for other services such as Bankruptcy, Antitrust, Intellectual Property, Asset recovery and Post-settlement monetisation.

BUR latest news

As per news sources, A United States based Hedge Fund, Muddy Waters had accused Burford Capital of poor governance by misrepresentation of its litigation finance business, in early August. This led to Burford capital’s share price to go from GBX 1381.0 per share at close on August 5, 2019 to GBX 605.0 per share at close on August 7, 2019 wiping off more than half of Burford’s value amounting to more than £1 billion in total. Muddy waters, through a 25-page dossier, reported that Burford’s management had mismarked the value of the cases that it had invested, which led to a bloated balance sheet. The company also claimed that Burford had used non-standard accounting practices to mislead its shareholders and that it was going to run out of cash. It was also reported that the Muddy Waters had submitted its 25 Page report on Burford Capital to the Financial Conduct Authority (FCA) to investigate this issue. In response to this, the Burford Capital founder, Mr Chris Boggart, reportedly said that the company will sue Muddy waters for its “unfair criticism” due to which the value of the company was reduced to half. The company also issued a 9-page rebuttal to Muddy Waters’ report in which it said that the report is meant to float “false and misleading” information to drive down its share price. In its exchange filing, the company in its rebuttal came up with many common analytical errors, factual mistakes and selective use of information.

BUR Financial Performance (Interim results for six months ended 30 June 2019)

On 25 July 2009, the company announced its interim results for six months ended 30 June 2019. The company reported a total income of US $287.04 million in H1 2019, up 40 per cent year on year from H1 2018 total income at US $205.20 million. This was primarily driven by investment income growth of 36 per cent year on year from US $195.1 million in the first half of 2018 to US $264.99 million in H1 2019. The company reported an increase in operating profit by 37 per cent year on year from US $182.72 million in H1 2018 to US $251.19 million in H1 2019. Consequently, the company also reported a 41 per cent year on year increase in the profit before tax (PBT) to US $231.46 million in H1 2019. The company also reported the profit after tax (PAT) at US $225.22 million in the first of 2019,  growth in PAT of 36 per cent year on year from US $165.56 million in H1 2018. Given this excellent performance announced by the company, the board declared an interim H1 2019 dividend of US Cents 4.17 per share, a 14 per cent increase in comparison with the H1 2018 interim dividend of US Cents 3.67 per share. As on 30 June 2019, total assets were valued at US $2.25 billion.

BUR Share Performance

On 30th September 2019, at 11:30 AM GMT, while writing, BUR stock traded at GBX 835.50 per share; an increase of 5.09 per cent or GBX 40.50 per share in comparison with the previous day’s closing price at GBX 795.0 per share. While writing, Burford Capital Limited traded 119.75 per cent above its 52-week low price of GBX 380.20, set on August 07, 2019, immediately after the story by Muddy Waters broke out. The company’s Market Capitalisation currently stood at GBP 1.738 billion.

230,430 stocks of the company have been traded by the time of writing. The average volume of trading per day for last one year has been 864,330. The stock has plunged by 57.02 per cent in the previous one year from the price of GBX 1990.00 per share.

The beta of the stock was at 1.3215, showing that the share price movement is more volatile compared to the benchmark market index.

Hurricane Energy Plc

Hurricane Energy Plc (HUR) is a United Kingdom based oil and gas production company that is involved in the exploration of oil and gas reserves across the UK continental shelf. The company has various assets under its ownership, including the Lancaster Early Production System (EPS) and the Whirlwind discovery. The company also has two drilled basement reservoirs in Lancaster which are unique from other basement fields in a way that they were drilled as primary basement targets, while other basement fields are generally drilled into by accident when the operator is seeking a different well above such basements. The company is confident of the availability of oil in these wells because the company has been able to produce Hydrocarbons to surface and various hydrocarbon indicators are similar in certain ways to those at Lancaster, along with the identification of a fractured network that is well connected. The company estimate says that the two basement reservoirs contain around 200 million barrels of oil equivalent each. The company’s primary business strategy revolves around producing, developing, appraising and exploring significant oil reserves and resources which can lead to the production of oil. This strategy is driven by one of the company’s key strength, which is the unrivalled and technically driven expertise in naturally fractured basement reservoirs.

HUR Latest News

On 2nd September 2019, the company provided an operational update regarding Lancaster Early Production System and the Lincoln Crestal well. The company highlighted that the availability and production since the first oil have been above the guidance in the Lancaster EPS System. The company also reported that the average production rate was at 14,000 barrels of oil per day from first oil to 17 August 2019. The company reported that they had sold 1.2 million barrels of crude oil till 2 September 2019, the day of the update. The company also provided an update on the Lincoln Crestal Well highlighting that the well was being prepared for drill stem testing. The company’s aggregate production guidance specific to the Lancaster EPS for H2 2019 at an average production rate of 11,000 barrels of oil per day has been maintained, based at system availabilities of 45 per cent and 65 per cent in Q3 and Q4 respectively.

HUR Financial Performance (Half-year results for the period ended 30 June 2019)

On 20 September 2019, the company announced its half-year results for the period ended 30 June 2019, which can be considered as a milestone period for the company as the company recognised revenue for the first time. The company reported an operating profit at US $1.2 million in H1 2019, as compared to an operating loss in H1 2018 at US $4.7 million. The company also reported a Loss after Tax at US $21.2 million in the first half of 2019, displaying an improved performance as compared to the Loss after tax in H1 2018 at US $75.1 million. The company reported an unrestricted cash position at US $81.4 million as on 30 June 2019.

 

HUR Share Performance

On 30th September 2019, at 12:45 PM GMT, while writing, HUR stock traded at GBX 42.42 per share; a decline of 0.80 per cent or GBX 0.34 per share in comparison with the previous day’s closing price at GBX 41.76 per share. While writing, Hurricane Energy Plc traded 11.63 per cent above its 52-week low price of GBX 38.00, set on June 05, 2019. The company’s Market Capitalisation was at GBP 851.02 million.

2.37 million stocks of the company have been traded by the time of writing. The average volume of trading per day for last one year has been 8.12 million. The stock has plunged by 27.49 per cent in the previous one year from the price of GBX 60.05 per share.

The beta of the stock was at 1.2004, showing that the share price movement is more volatile compared to the benchmark market index.