Prospects improving for Shetland oil pioneer

SHETLAND-focused Hurricane Energy saw its shares rise about 10% from a low base after highlighting the boom it enjoyed following the recent rise in oil prices.

Four months after the High Court blocked a debt-for-equity swap scheme that would have left creditors in control of the business, the company’s position looks much more positive following improving market conditions that accompanied the relaxation of lockdown measures.

The hurricane faced great challenges after scaling down estimates of the size of discoveries it made only to see oil prices plunge amid the pandemic. Directors decided that the court-blocked restructuring was the only realistic option open to the company.

However, Hurricane said yesterday that it generated a profit of $ 42 million in the first half of this year. The company lost $ 302 million in the same period last year as a result of write-downs.

The improvement in its commercial fortunes reflects the benefit of the sharp increase in crude prices observed since the third quarter of last year, as part of the deployment of vaccines against the coronavirus.

READ MORE: Case for development of large discovery off Shetland Islands reinforced by rising oil prices

After falling below $ 20 a barrel in April last year, the price of Brent crude hit a three-year high of $ 84.52 a barrel on Monday.

As Hurricane’s production costs averaged $ 24.80 / bbl in the first half of the year, it was able to generate a lot of cash from its production.

Last month, the company used some of the money it had accumulated to pay off one-third of the $ 230 million in outstanding bonds at a discounted price, for an expense of $ 62 million.

Managing Director Tony Maris said yesterday: “The recent rise in oil prices, combined with the impact of bond buybacks, internal cost reductions and other cost-cutting measures, has helped bridge the gap. funding gap for the repayment of bonds at hand.

He added: “We are optimistic that, despite the economic and operational uncertainties that exist, even if a deficit remains, it may be possible to find a solution to repay the entire bond when due. . ”

Hurricane Energy Managing Director Antony Maris

The improvement in the company’s fortunes will be welcomed by industry observers.

However, it may not be strong enough to allow Hurricane to fully realize the potential donors have seen in its acreage. Mr. Maris noted: “The challenge of financing investments in our assets remains. ”

The hurricane sparked huge excitement about the potential of the relatively under-explored West Shetland region after the Lancaster discovery went into production in 2019.

Production from the field plunged after the company had problems with a well.

While Centrica-owned Spirit Energy company purchased Hurricane-owned Greater Warwick Area (GWA), a drilling campaign by the companies on it produced mixed results.

READ MORE: Aberdeen-based Spirit Energy for sale as Centrica moves closer to nuclear

Hurricane said yesterday that it is continuing to assess options to boost production at the Lancaster field, in addition to engaging with GWA stakeholders on possible pathways towards development of the Lincoln discovery.

Centrica put up for sale its majority stake in Spirit in 2019, but could not find a buyer.

Hurricane Energy shares closed up 0.42p, at 4.54p, yesterday

They sold for around 60 pence in 2019 after the company started production from Lancaster.

The hurricane produced an average of 11,100 barrels of oil per day (bpd) from Lancaster in the first half of the year, up from 14,600 bpd last time. He reaffirmed forecasts that production for the six months from October 1 is expected to be between 8,500 and 10,000 bpd.

Hurricane, based in Surrey, was founded by geologist Robert Trice to focus on a layer of granite known as the fractured bedrock. In June of last year, Mr. Trice resigned his post as Managing Director.

READ MORE: Orkney oil terminal to turn into hydrogen production complex

Last June, Hurricane parted ways with its chairman and four directors after facing an attempted coup led by a dissident investor.

Steve McTiernan has resigned as chairman along with the four non-executive directors.

After leading opposition to the debt-for-equity swap proposed by Hurricane, Crystal Amber Fund called an extraordinary general meeting at which it wanted shareholders to vote Mr. McTiernan and the four non-executives on the board of administration and appoint two replacements.

The fund’s nominees, Alan Wright and David Craik, were appointed to the board as non-executive directors in June. Mr. Wright is Acting Chairman of the Board of Directors of Hurricane.

In its annual results statement last month, Crystal Amber Fund said it has taken decisive action to protect Hurricane Energy’s shareholder value.

Philip Wolfe, who has held senior positions in oil and gas companies and investment banks, joined Hurricane’s board on Wednesday as a non-executive director. Mr. Wolfe is a former head of HSBC’s global oil and gas operations.

Source link

About Vicki Davis

Check Also

Comment: Should we be worried about a rise in the cost of living in 2022?

It comes after private house prices have risen by around 9% since the start of …

Leave a Reply

Your email address will not be published. Required fields are marked *