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Hurricane Energy

LN: HUR

£824.8m market cap

41.44p 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

Hurricane Energy is a UK-based E&P focused on hydrocarbon resources in naturally fractured basement reservoirs. Hurricane’s CPRs ascribe 2P reserves + 2C contingent resources of 2.6bn boe (gross) across all assets. In June 2019, first oil was achieved on the Lancaster early production system (EPS); Hurricane anticipates a gradual ramp-up in facilities availability over the next six months. Since first oil, the company has sold over 1.6mmbbls of oil generating its first revenues from the Lancaster EPS. Successful confirmation of modelling parameters will aid in the de-risking of full field development. In September 2019, Hurricane announced positive flow test results from the Lincoln Crestal well located in the Greater Warwick Area (GWA). The well will be used for production via tie-back to Lancaster’s FPSO in 2020. Production will generate reservoir data to be used in planning future phases of development of GWA. The last well of the 2019 drilling programme, Warwick West, was spudded at the end of September. Our risked valuation of Hurricane currently stands at 102.8p/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 44.5
2020E 365.0 256.8 157.1 12.9 4.1 4.4
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 18/11/2019
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 (3.4) 6.5 (1.3)
Relative* (5.3) 2.8 (6.0)
52-week high/low 60.8p/38.7p
*% relative to local index
Key management
Dr Robert Trice CEO
Alistair Stobie CFO

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