Hurricane Energy shares drop as loss widens

AIM-listed oil and gas company Hurricane Energy (LON:HUR) has reported a loss after tax of $60.9 million for the year ended 31st December, a sharp increase from last year driven by a non-cash fair value adjustment in a derivative valuation. Shares in the company fell by 1.91% to 46.05p (as of 16:00 GMT)

CEO Dr Robert Trice commented: “We will soon be generating the long-term production data that will enable the Company to plan for full field development of the Greater Lancaster Area (GLA). Initial production is planned to be 17,000 barrels of oil per day, net of anticipated downtime. At this rate we expect to generate significant cash flow – over $200 million in operating cash flow on a full year run-rate basis at a $60/bbl Brent oil price. This will allow us to pursue significant further appraisal and development activities within our Rona Ridge portfolio.

“This follows a highly successful 2018, which involved execution of a development programme including the upgrade of the Aoka Mizu FPSO and a significant offshore installation programme. We also welcomed a new partner, Spirit Energy (Spirit), who farmed into 50% of the Greater Warwick Area (GWA) in a transformational deal.

“The Spirit farm-in has significantly accelerated activity on the GWA, providing up to $387 million for a phased work programme. This includes the drilling of three wells in 2019 with minimal net cost to Hurricane, targeting first oil from a tie-back to the Aoka Mizu in 2020. The transaction brings forward a potential final investment decision on a full field development on these assets by a number of years. The deal also means we will be able to fund the next phase of appraisal drilling on the GLA and Whirlwind from our own resources, thereby putting Hurricane in a position to achieve maximum optionality and greatest value for our shareholders.

“With first oil from the Lancaster EPS and a three well drilling programme on the GLA, we look forward to another exciting period for Hurricane in 2019 as we advance our strategy of de-risking and monetising the substantial resources in our Rona Ridge portfolio“.