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UK-based oil and gas company Hurricane Energy has initiated a formal sale process for its business.

The move comes after an offer from an undisclosed bidder was rejected by the Hurricane board, citing it as too low.

Hurricane said it received bid of 7.7 pence apiece in cash, representing a 13% premium compared with the mid-market closing price of 6.8 pence for each share on 1 November 2022.

Hurricane’s board recommended its shareholders not to accept the bid from the undisclosed party.

As part of sale process, the board of the UK firm has selected Stifel Nicolaus Europe as its financial adviser and as its independent financial adviser.

Crystal Amber Fund, Hurricane’s biggest shareholder with a 29% stake, has proposed to monetise its shareholding in the oil and gas company.

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In a press statement, Hurricane said: “The company has decided to launch a formal sale process, as referred to in Note 2 on Rule 2.6 of the Code, in order to establish whether there is a bidder prepared to offer a value that the board considers attractive, relative to the standalone prospects of Hurricane as a publicly traded company and accordingly one that should be recommended to all shareholders.”

In case the sale process does not result in a deal, Hurricane plans to return up to $70m to shareholders in the first quarter of 2023.

Hurricane chairman Philip Wolfe said: “The board intends to deliver near term shareholder returns through either the successful outcome of the formal sale process or with a substantial capital return programme.

“Hurricane is in a strong position, with an experienced senior team, robust balance sheet, profitable ongoing production, and significant tax losses, a platform capable of supporting distributions throughout Lancaster’s expected economically productive life.”

In 2021, Hurricane transferred its control to its creditors in a debt-to-equity swap after cutting flagship Lancaster field’s reserves estimates and production outlook.