TIDMHUR
RNS Number : 5594Y
Hurricane Energy PLC
17 January 2022
17 January 2022
Hurricane Energy plc
("Hurricane" or the "Company")
Trading, Operational and Financial Update
Hurricane Energy plc, the UK based oil and gas company, provides
a trading and operational update ahead of its results for the year
ended 31 December 2021. This information is unaudited, and subject
to further review and adjustments.
Trading Update
-- Operations
o Production for the final three months of 2021 averaged 10,000
bopd, within guidance
o Production and oil sales for the year ended 31 December
2021:
-- Production: 3.7 MMbbls (average of 10,267 bopd)
-- Oil sales: 3.6 MMbbls across seven cargoes
o Aoka Mizu FPSO uptime of 99% during 2021
-- Key financials for the year ended 31 December 2021:
o Revenue: $239 million (2020: $180 million)
o Average realised oil price: $67/bbl (2020: $35/bbl)
o Year-end total debt: $78.5 million following repurchase of
$151.5 million of outstanding Convertible Bonds for cancellation
during H2 2021
o Year-end net free cash(1) : $50 million
o Year-end net debt(2) : $28.5 million
1. Unrestricted cash and cash equivalents, plus current
financial trade and other receivables, current oil price
derivatives, less current financial trade and other payables.
2. Net free cash less the par value of the outstanding
Convertible Bonds (being the total remaining amount repayable on
maturity of the Bond in July 2022)
Lancaster Field Operations Update
The following table details production volumes, water cut and
minimum flowing bottom hole pressure for the 205/21a-6 ("P6") well
during December 2021.
December 2021 Lancaster Field Data
P6 P7z(3)
O il produced during the month -
(Mbbls) 293
--------- -------
Average oil rate (bopd) 9,460(6) -
--------- -------
W ater produced during the month -
(Mbbls) 178
--------- -------
A verage water cut(4) 38% -
--------- -------
Well gauge p ressure (psia)(5) 1,603 -
--------- -------
3. The 205/21a-7z ("P7z") well was not on production during December 2021
4. Expressed as total water produced divided by total fluid (oil and water) production
5. Pressure reported is the monthly minimum from well downhole gauge
6. December month average rate impacted by downtime arising from
testing and pigging operations
During December, the well gauge pressure reached and declined
below bubble point, in line with the previously guided timing of
this occurring between late December 2021 and mid-February 2022. No
production issues arising from reaching bubble point have been
observed to date.
As of 15 January 2022, Lancaster was producing c.9,650 bopd from
the P6 well alone with an associated water cut of c.39%.
The next cargo of Lancaster crude is anticipated to be lifted
towards the end of January 2022.
Financial Update
As of 31 December 2021, the Company had net free cash(1) of $50
million, compared to the last reported figure of $127 million as of
30 November 2021. There were no liftings of Lancaster crude in
December.
During December 2021, $73.5 million in aggregate principal
amount of the Company's $230 million 7.50 per cent. Convertible
Bonds due 2022 were repurchased and cancelled by a subsidiary of
the Company for a total cash consideration of $70.3 million
(including accrued interest). As a result of the repurchases of the
Bonds in December 2021, and the $78.0 million tender offer which
settled on 15 September 2021, the Company has generated a combined
net saving of $29.5 million in debt repayment and interest charges.
$78.5 million in aggregate principal amount of the Bonds now remain
outstanding, resulting in net debt(2) of $28.5 million as at 31
December 2021.
The Company, in finalising its tax returns for the years ended
2019 and 2020, has made claims for R&D tax credits, including
via the surrender of certain of its subsidiaries' brought forward
tax losses. Should these claims be approved by HMRC, the Company
anticipates a cash credit of up to c.$4.5 million to be received
during Q2 2022.
The Company believes that net free cash provides a useful
measure of liquidity after settling all its immediate creditors and
accruals and recovering amounts due and accrued from joint
operation activities, outstanding amounts from crude oil sales and
after settling any other financial trade payables or receivables.
It should be noted that the net free cash is calculated as at the
balance sheet date and does not take into account future
liabilities that the Company is already committed to but have not
yet been accrued. As such, not all of the net free cash would be
available for repayment of the remaining outstanding Convertible
Bonds at their maturity in July 2022.
Antony Maris, Chief Executive Officer of Hurricane,
commented:
"Despite the major challenges faced by Hurricane last year, the
team has done a superb job at delivering excellent production
performance and high uptime on the FPSO, as well as finding cost
savings. All this has been done while at the same time maintaining
high levels of HSSE performance, which is always the first priority
for the Company.
"Oil prices, while volatile, have been stronger in the second
half of the year and, combined with the impact of the bond
buybacks, production performance and cost reduction measures, we
are optimistic that the ability to repay the bonds in full at
maturity is now within reach.
"Given our current prediction of performance and assuming oil
prices continue to be within the range experienced over the past
month, we believe that post clearing our bond debt Hurricane will
have between $8-38 million of net free cash at the end of July
2022. This needs to cover any subsequent working capital
requirements until revenue is received from the next lifting. The
amount of net free cash will also be reduced by the level of
escrowed cash that Bluewater, our FPSO provider, requires as part
of any extension deal. We continue to engage with Bluewater and
remain optimistic of finding a mutually acceptable deal that will
enable the Company to continue production beyond repayment of the
bond.
"As such, going forward we are working hard towards ensuring a
confident future for Hurricane based upon a sustainable financial
platform."
-ends-
Contacts:
Hurricane Energy plc
Antony Maris, Chief Executive Officer
communications@hurricaneenergy.com +44 (0)1483 862820
Stifel Nicolaus Europe Limited
Nominated Adviser & Joint Corporate Broker
Callum Stewart / Jason Grossman +44 (0)20 7710 7600
Investec Bank plc
Joint Corporate Broker
Chris Sim / Jarrett Silver +44 (0)20 7597 5970
Vigo Consulting
Public Relations
Patrick d'Ancona / Ben Simons
hurricane@vigoconsulting.com +44 (0)20 7390 0230
About Hurricane
Hurricane has a 100% interest in and operates the Lancaster
field, the UK's first field to produce from a fractured basement
reservoir.
Hurricane also has a 50% interest in the Greater Warwick Area
licence, which contains the Lincoln and Warwick assets.
Visit Hurricane's website at www.hurricaneenergy.com
Glossary
bopd Barrels of oil per day
FPSO Floating production storage and offloading
vessel
===========================================
HSSE Health, Safety, Security and Environmental
===========================================
Mbbls Thousand barrels
===========================================
psia pounds per square inch absolute
===========================================
R&D Research and development
===========================================
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END
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