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Hurricane Energy

LN: HUR

£889.2m market cap

45.36p 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

With the Aoka Mizu FPSO now on station and hooked up at the Lancaster field, early production system (EPS) first oil remains on track for the end of H119. Hurricane (HUR) is currently focusing on topside commissioning prior to start up, which will be followed by a ramp-up period to a targeted gross plateau rate of 20kbd. In addition to progressing Lancaster, the company has a full programme of activity in its neighbouring Greater Warwick Area (GWA), with a three-well E&A programme expected to kick off in Q219 at Warwick Deep. This accelerated GWA programme is being made possible by Hurricane’s 2018 farm-out to Spirit Energy. Our risked valuation stands at 102.3p/share (from 102.8p/share) as we remove Edison’s 5% capex cost contingency, roll forward NAV and adjust our short-term oil price assumptions (long-term Brent remains $70/bbl).

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 378.2
2020E 345.8 209.3 109.6 12.9 4.6 6.2
Last updated on 17/04/2019
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 17/04/2019
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 (2.7) (8.6) 20.3
Relative* (5.6) (16.1) 17.1
52-week high/low 60.0p/38.6p
*% relative to local index
Key management
Dr Robert Trice CEO
Alistair Stobie CFO

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