With the oil price hitting a 17-year low this week, Hurricane Energy (HUR) has not committed to any major changes in strategy in 2020 for what will be its second year in production.
Other North Sea companies have already rung the alarm bells, and industry body UK Oil and Gas says existing tight margins will mean difficulty all the way along supply chains.
Hurricane was already trading at less than half its 2019 peak of 61p before the oil price crash over disappointing test results. It says its operating cost of $17 (£14.75) per barrel (bbl) and cash balances of $164m as at mid-March will keep it running.
The company says it will use its cash flow to develop more of a “cash cushion”, although there will still be spending on licence obligations and some drilling. Hurricane says it is in discussions with Spirit over Greater Warwick Area spending, with a “forward programme” and budget yet to be agreed.
Panmure Gordon analyst Colin Smith said there were questions over developing both Warwick and the Lancaster field further at current oil prices.
Last year was Hurricane’s first year of production, although an exploration write-off of $67m kept it in an operating loss position at $15m, from $170m of revenue. The write-off came from the Whirlwind licence, which Hurricane relinquished its rights to in December.
| HURRICANE ENERGY (HUR) | ||||
| ORD PRICE: | 9p | MARKET VALUE: | £185m | |
| TOUCH: | 9-10p | 12-MONTH HIGH: | 65p | LOW: 7p |
| DIVIDEND YIELD: | na | PE RATIO: | 4 | |
| NET ASSET VALUE: | 35ȼ | NET DEBT: | 19%* | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (ȼ) | Dividend per share (ȼ) |
| 2015 | nil | -8.4 | -1.3 | nil |
| 2016 | nil | -6.4 | 0.1 | nil |
| 2017 | nil | -7.0 | -0.5 | nil |
| 2018 | nil | -60.9 | -3.1 | nil |
| 2019 | 170 | -1.8 | 3.0 | nil |
| % change | - | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| £1=$1.16 *Includes lease liabilities of $99.2m | ||||
