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Hurricane Energy

LN: HUR

£934.6m market cap

46.96p last close

Hurricane Energy is an E&P focused on fractured basement exploration and development in the West of Shetland region. The company’s 100%-owned Lancaster oil discovery (523mmbbl 2P reserves + 2C resources) achieved first oil on target in H119.

Investment summary

This morning Hurricane Energy announced the flow test results from its Lincoln Crestal well, the second well of a three-well drilling campaign in the Greater Warwick Area (GWA). The well tested at a maximum stable flow rate of 9,800bopd using electrical submersible pumps (ESPs). The well flowed at an average rate of 4,682bopd under natural conditions and no formation water was produced. The well will now be suspended, with the intention that it will be used for production via tie-back to Lancaster’s Aoka Mizu FPSO in 2020, subject to further work, regulatory consent and final investment decision by the joint venture. Production from the tie-back would generate reservoir data to be used in planning future phases of development of GWA. The drilling rig will now move to the location for the third and last well of the 2019 drilling programme, Warwick West. Our latest risked valuation of Hurricane Energy stands at 102.8p/share, with GWA tie-back being valued at 3.5p/share and GWA FFD at 21.6p/share. Hurricane Energy is currently trading at 49.0p/share.

Y/E Dec
Revenue (US$m)
EBITDA (US$m)
PBT (US$m)
EPS (c)
P/E (x)
P/CF (x)
2017A 0.0 (14.6) (7.0) (0.4) N/A N/A
2018A 0.0 (12.6) (18.5) (2.2) N/A N/A
2019E 113.2 68.1 22.4 (2.5) N/A 48.5
2020E 365.0 256.8 157.1 12.9 4.4 4.8
Last updated on 13/09/2019
Industry outlook

The Lancaster EPS development is forecast to generate a point-forward IRR of c 40% based on our US$70/bbl long-term Brent commodity price assumption.

Last updated on 13/09/2019
Sector
Oil & gas
Share price graph
Balance sheet
Forecast net debt (US$m) 115.6
Forecast gearing ratio (%) 18
Price performance
%
1m
3m
12m
Actual 15.1 (12.3) (10.0)
Relative* 12.5 (13.0) (10.6)
52-week high/low 60.8p/38.9p
*% relative to local index
Key management
Dr Robert Trice CEO
Alistair Stobie CFO

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