TIDMHUR
RNS Number : 0615P
Hurricane Energy PLC
16 June 2022
16 June 2022
Hurricane Energy plc
("Hurricane" or the "Company")
Operational and Financial Update
Hurricane Energy plc, the UK based oil and gas company, provides
an update on Lancaster field operations and net free cash balances
as of 31 May 2022.
Lancaster Field Operations Update
The following table details production volumes, water cut and
minimum flowing bottom hole pressure for the 205/21a-6 ("P6") well
and the 205/21a-7z ("P7z") well during May 2022.
May 2022 Lancaster Field Data
P6 P7z(1)
O il produced during the month
(Mbbls) 259 0.4
------ -------
Average oil rate (bopd) 8,366 203
------ -------
W ater produced during the month
(Mbbls) 201 9
------ -------
A verage water cut(2) 44% 96%
------ -------
Well gauge p ressure (psia)(3) 1,572 n/a
------ -------
1.P7z production test carried out 12/05/2022 - 13/05/2022,
average rates shown over the 48 hour test period
2.Expressed as total water produced divided by total fluid (oil
and water) production
3.Pressure reported is the monthly minimum from well downhole
gauges.
As of 14 June 2022, Lancaster was producing c.8,700 bopd from
the P6 well alone with an associated water cut of c.45%.
Over a two-day period in May the Company performed a number of
tests on the P7z well that involved temporarily reducing the flow
rate from the P6 well. This has therefore reduced the overall
average production rate for the month from P6. The data obtained
will be useful in refining production forecasts for P6 and
evaluating potential future field development opportunities.
The 29(th) cargo of Lancaster oil, totalling approximately 547
Mbbls, was lifted on 24 May 2022. This cargo was priced by
reference to the average of the first five days of May's Dated
Brent quotes, being $110/bbl, resulting in net revenue of $59.5
million. The next cargo is anticipated to be lifted in late July
2022.
Financial Update
As of 31 May 2022, the Company had net free cash(4) of $139
million compared to the last reported balance of $92 million as of
30 April 2022. $78.5 million of Convertible Bonds remain
outstanding and are due to be repaid in July 2022. Following the
repayment, assuming oil prices remain at over $90/bbl, at the end
of July the Company is forecasting to be holding net free cash in
excess of $75 million. If oil prices for the July cargo are above
$120/bbl the net free cash forecast increases to be above $90
million.
4.Unrestricted cash and cash equivalents, plus current financial
trade and other receivables, current oil price derivatives, less
current financial trade and other payables.
Energy Profits Levy
On 26 May 2022 the UK Government announced the introduction of
the Energy Price Levy ("EPL"). As the full details and related
legislation of the EPL have not yet been published it is not yet
possible to determine the full impact this will have on the
Company. Included in the forecast July net free cash balance above
is a preliminary estimate of the liability up to the end of July
2022, totalling approximately $5 million, based on the information
available to date. It should be noted that this estimate could
change and be significantly higher or lower depending on the actual
details contained within the legislation.
As the EPL includes an investment allowance, should the Company
decide to invest in further development on its existing assets or
development on assets following an acquisition, such investment
would partially offset the EPL charge. The full effect of such an
offset will depend on the details of the EPL legislation and the
size and nature of any such investment.
The Company will provide further information regarding the
impact of the EPL in due course and following the release of the
legislation.
Antony Maris, CEO of Hurricane, commented:
" Hurricane's production continues to generate significant
positive cashflow enabling us to look beyond Bond repayment with a
strong cash position and balance sheet. Management and the Board
are working hard to assess and evaluate possible organic and
inorganic investment opportunities.
Our industry works within the framework of long investment
cycles and highly volatile commodity markets. Fiscal stability is
key in supporting the investment decision making to meet the UK's
energy transition targets and the introduction of the EPL is
unhelpful in that regard. However, as a potential investor in
future UK oil and gas assets, we also stand to benefit from
investment incentives/relief.
We believe there are some exciting opportunities ahead and that
the Company is well placed to grow its asset base, deliver
significant shareholder value and contribute to ensuring security
of oil and gas supply for the UK."
-ends-
Contacts:
Hurricane Energy plc
Antony Maris, Chief Executive Officer
communications@hurricaneenergy.com +44 (0)1483 862820
Stifel Nicolaus Europe Limited
Nominated Adviser & Joint Corporate Broker
Callum Stewart / Jason Grossman +44 (0)20 7710 7600
Investec Bank plc
Joint Corporate Broker
Chris Sim / Jarrett Silver / Charles Craven +44 (0)20 7597 5970
Vigo Consulting
Public Relations
Patrick d'Ancona / Ben Simons
hurricane@vigoconsulting.com +44 (0)20 7390 0230
About Hurricane
Hurricane has a 100% interest in and operates the Lancaster
field, the UK's first field to produce from a fractured basement
reservoir.
Hurricane also has a 50% interest in the Greater Warwick Area
licence, which contains the Lincoln and Warwick assets.
Visit Hurricane's website at www.hurricaneenergy.com
Glossary
bopd Barrels of oil per day
FPSO Floating production storage and offloading
vessel
===========================================
Mbbls Thousand barrels
===========================================
psia pounds per square inch absolute
===========================================
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