31st Aug 2021 11:44
(Alliance News) - Hurricane Energy PLC shares were volatile on Tuesday as it looks set to return over USD74 million to its creditors due to its Lancaster field decommissioning in 2022.
Shares in the Surrey, England-based producer from Lancaster oil field, located west of Shetland, were 2.1% lower at 2.30 pence Tuesday mid-morning in London, though traded as much as 13% higher earlier in the session.
At the end of August, Lancaster was producing 11,100 barrels of oil per day from the P6 well alone with an associated water cut of 31%. The 24th cargo of Lancaster oil, totalling approximately 505,000 barrels, was lifted in late August.
Hurricane does not expect an impairment charge from the field, but noted this could change at current oil prices and production levels.
Hurricane said: "The company resolving not to exercise its option to extend the charter of the Aoka Mizu FPSO in its current form beyond June 2022, the company expects to recognise a non-cash accounting gain of approximately USD48 million, due to writing-back the portion of the balance sheet lease liability relating to the three-year option period expiring in June 2025."
Hurricane estimates it will have USD75.4 million in potential recovery available to creditors, based on predicted April 2023 free cash of USD171 million.
"The company is presently unable to identify the most likely outcome, as the range of potential scenario-based outcomes are dependent on multiple and dynamic factors and uncertainties outside of the company's control making it difficult to provide reliable forecasts and predictions," Hurricane added.
The firm also noted its interim results look set to be released in October as it is in the process of appointing a new external auditor after the re-appointment of Deloitte LLP was voted down at its most recent annual general meeting.
Finally, Hurricane has opened a tender offer for its 2022 7.50% USD230.0 million convertible bonds.
"The purpose for the offer is to utilise a portion of the group's available cash balances to purchase bonds prior to their maturity as part of a proactive liability management exercise on the group's outstanding debt. The offer will also provide liquidity and certainty of outcome to those holders whose bonds are accepted in the offer, given the range of future dynamic factors and uncertainties which are outside the company's control," Hurricane explained.
By Paul McGowan; [email protected]
Copyright 2021 Alliance News Limited. All Rights Reserved.
Related Shares:
HUR.L