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Hurricane Energy

LN: HUR

£696.6m market cap

35p 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 Warwick West well, which is the third and last well from the 2019 drilling campaign in the Greater Warwick Area (GWA). The well confirmed the discovery of 43° API light oil and tested at a stable flow rate of 1,300bod on natural flow with less than 0.5% of water being produced. Hurricane and Spirit Energy are evaluating the results of the 2019 drilling campaign and further technical analysis will determine both the potential for GWA to be a single accumulation and its volumetrics. Our risked valuation of Hurricane stands at 102.8p/share, with GWA tieback valued at 3.5p/share and GWA full field development at 21.6p/share. Hurricane shares are trading at 37.5p after dropping c 20% this morning. This implies the market is not attributing any value to the GWA full field, even though an oil discovery was observed.

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 38.3
2020E 365.0 256.8 157.1 12.9 3.5 3.8
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 04/12/2019
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 (18.4) (20.0) (18.8)
Relative* (17.1) (19.7) (21.9)
52-week high/low 60.8p/34.7p
*% relative to local index
Key management
Dr Robert Trice CEO
Alistair Stobie CFO

Content on Hurricane Energy