Hurricane Energy PLC (LSE:HUR) shares rose another 10% in Monday’s dealing as soaring crude oil prices make it increasingly likely that the UK offshore oiler can escape its debt problem.
The company produces just shy of 10,000 barrels per day from the Lancaster field - which amid technical and performance failings has not lived up to previously lofty expectations – and it is facing a July deadline to repay nearly US$80mln of convertible bonds.
Climbing oil prices up until the turn of the year opened up and increased the possibility that the company could generate sufficient cashflow from production to repay the debt, and, as crude prices spike to the highest level since 2008, investors appear to be increasingly confident to back what could be a phoenix-like recovery for the company.
Longer-term questions will still need answering, in regards to the bigger picture plans for Lancaster and the longevity of the operations there. For the time being, however, investors will look to the July deadline with more confidence.
Trading at just over 9p on Monday, Hurricane shares are up some 135% in 2022 to date.
In February, the company reported that it was producing 9,500 bopd and that, in January, it shipped its 27th cargo of crude (amounting to 530,000 barrels) priced at US$81.40 per barrel.
The next shipment was expected “in late March”, at which point the shipment would likely be priced significantly higher.
Brent crude was priced above US$130 per barrel today as the market priced in escalating tensions and sanctions against Russia, as the Biden administration reportedly began contemplating a ban on Russia crude imports.
As of January 31 2021, Hurricane had US$85mln of net free cash.