As its interims attest, the first six months of 2016 were a highly productive time for UK continental shelf driller Hurricane Energy (HUR), but the real news came earlier this month with the success of the pilot well at its Lancaster field. Now, with the reservoir significantly derisked - and revised to a 62m barrel (mmboe) development with life-of-field operating costs of $26 (£20) a barrel - drilling at the horizontal sidetrack well is under way. Results of the second stage of the development should be available before the end of 2016, when Hurricane will share its drilling analysis with potential partners.
The company managed to raise £52.1m in April, while operating expenses actually fell by 6 per cent in the period to £2.9m. That means the company has enough cash on hand to cover all expected drilling costs, trade and general and administrative costs for "at least the next 12 months", from the date the balance sheet was recorded on 30 June. However, development of the early production system will require debt or equity financing, possibly in combination with a farm-down of Hurricane's equity in Lancaster.
FinnCap forecasts an adjusted pre-tax loss of £5.6m this year and in both 2017 and 2018.
HURRICANE ENERGY (HUR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 40p | MARKET VALUE: | £390m | |
| TOUCH: | 39.5-40p | 12-MONTH HIGH: | 44p | LOW: 9p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 24p* | NET CASH: | £57m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | nil | -3.2 | -0.51 | nil |
| 2016 | nil | -1.8 | -0.25 | nil |
| % change | - | - | - | - |
Ex-div: na Payment: na *Includes intangible assets of £178m, or 18p a share. | ||||
