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Hurricane Energy swings to profit as production milestone reached

Published 14/10/2021, 09:21
Updated 14/10/2021, 09:25
© Reuters.

© Reuters.

By Samuel Indyk

Investing.com – Hurricane Energy (LON:HUR) swung to a profit the first half of the year as production from the Lancaster field generated higher revenues.

The oil & gas company said profit after tax in H1 was $42.8 million after recording a loss of £307.8 million in the same period last year. Revenues increased to $124.5 million from four liftings of crude from the Lancaster field versus last year’s $81.9 million from seven liftings.

The company said it generated $75.9 million of operating cash flow, equivalent to $38.0/barrel and at the end of June had net free cash of $132.3 million.

Operations Update

In the Greater Lancaster area, Hurricane said the Aoka Mizu FPSO had an average field production uptime of 96% in the first half of the year. Lancaster EPS production averaged 11,100 barrels per day (bpd), primarily from the P6 well along.

The company achieved the production milestone of 10 million barrels during the first half of the year.

The AIM-listed company said it had elected not to exercise the three-year option for the Aoka Mizu that would have continued the contract until June 2025 but is in negotiations over extension options that would allow production to continue beyond June 2022.

“The first six months of 2021 have proved very challenging,” said Hurricane Energy Chief Executive Officer Antony Maris. “The focus has been on exploring ways to provide a stable financial platform for the Company, whilst in parallel delivering production as safely and efficiently as possible from Lancaster. Recent stronger oil prices combined with the impact of the bond buyback, internal cost-cutting, and other cost reduction measures, has brought the possibility of bridging the funding gap for the repayment of the bonds within reach.”

Outlook

Looking ahead, Hurricane reaffirmed production guidance for the six months from 1st October of 8,500-10,000 bpd. The company added it is continuing to evaluate options to further reduce debt and improve the viability of its Balance Sheet.

“Going forward our near-term priority remains the repayment of our convertible bonds, and as such we move into the second half of the year with an overarching focus on capital discipline and operational performance,” Maris added. “We are optimistic that, despite the economic and operational uncertainties that exist, even if a shortfall remains it may be possible to find a solution to repay the bond in full at maturity.”

At 09:19BST, Hurricane Energy shares were trading higher by 17.7% at 4.79 pence per share.

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