SHETLAND-focused Hurricane Energy has seen its shares jump 12 per cent after the company underlined how much cash firms are generating in the North Sea following the surge in oil prices.
The company increased cash balances by $35 million (£26m) in January, to $85m, putting it in a strong position to pay off creditors that looked set to take control of the business last year.
The company noted that it is due to repay $78.5m of Convertible Bonds in July.
The update provides further evidence of the apparent transformation in Hurricane’s fortunes the firm has enjoyed amid the increase in oil prices fuelled by the recovery from the pandemic.
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Hurricane faced big challenges after the Brent crude price plunged following the onset of the pandemic, to less than $20 per barrel in April 2020. The slump in the price had serious implications for Hurricane, which relies on the output from the Lancaster field off Shetland for income.
When the pandemic started the company had $230m bonds due for repayment this July.
Directors were so concerned about the outlook for the company that they proposed that Hurricane complete a debt-for-equity swap that would have left bond-holders in effective control of the company.
In June last year the High Court in London declined to approve the plan on the grounds that it would have deprived shareholders of all but a fraction of their equity and appeared to be premature.
The crude price has increased from around $65 per barrel at the time of the judgement to more than $90/bbl.
Hurricane has used around $130m of the cash it has generated in recent months to buy back $150m bonds at a discount.
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In the week after the High Court made its decision Hurricane’s former chairman, Steve McTiernan, and four non-executive directors resigned.
In December Hurricane said a review overseen by the firm’s non-executive directors had found the board members who proposed the restructuring plan had exercised their fiduciary duties diligently and acted in good faith.
Hurricane generated excitement about the potential of the West of Shetland area by making finds under the leadership of its founder Robert Trice. It started production from Lancaster in 2019. Following problems with a well on Lancaster, the Surrey-based firm slashed estimates of the size of the field and other discoveries.
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Mr Trice resigned in June 2020. Industry veteran Antony Maris became chief executive of Hurricane three months later.
Shares in Hurricane Energy closed up 0.6p at 5.77p. They sold for around 60p following the start of production from Lancaster.