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Hurricane Energy

LN: HUR

£1109.6m market cap

55.75p 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) is targeting first oil 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. With the introduction of hydrocarbons to the FPSO at the Lancaster field, early production system (EPS) first oil is expected shortly. Introduction of hydrocarbons is the final stage of commissioning and marks the beginning of the EPS start-up phase, which will be concluded with simultaneous flow from both wells for 72 consecutive hours. First oil will be followed by a ramp-up period to a gross plateau of 20kbd; once stabilised, focus will shift to data gathering to enhance reservoir understanding. Successful confirmation of modelling parameters will aid in the de-risking of full field development. Hurricane’s 2019 three-well drilling programme commenced with the spudding of Warwick Deep on 16 April 2019. This accelerated GWA programme is being made possible by Hurricane’s 2018 farm-out to Spirit Energy. Our valuation stands at 102.3p/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 109.4 24.2 (21.5) (2.5) N/A 454.0
2020E 345.8 209.3 109.6 12.9 5.6 7.5
Last updated on 18/06/2019
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 18/06/2019
Sector
Oil & gas
Share price graph
Balance sheet
Forecast net debt (US$m) 102.9
Forecast gearing ratio (%) 17
Price performance
%
1m
3m
12m
Actual (0.4) 12.5 21.5
Relative* (1.2) 10.9 25.9
52-week high/low 60.8p/39.0p
*% relative to local index
Key management
Dr Robert Trice CEO
Alistair Stobie CFO

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