Business

Shetland oil pioneer benefits from crude price surge

SHETLAND-focused Hurricane Energy has seen its shares surge 10 per cent from a low base after the company provided further evidence of the improvement in its fortunes it has enjoyed in recent months.

Creditors were set to take control of Hurricane earlier this year under a restructuring plan mooted by directors until the proposal was rejected by the High Court in June.

Directors had said the plan was the only realistic option open to the company, which faced the prospect of having to repay $230 million bonds (£170m) next year.

However, an update on trading from Hurricane showed that it has put itself in a stronger position to be able to clear its debts since the High Court decision.

The company has benefited from the recovery in oil prices in recent months. This has increased the value of the production from the Lancaster field it developed off Shetland.

READ MORE: Shell’s U-turn on Cambo field off Shetland will not help Scotland to cut emissions

Hurricane has been able to use some of the cash generated from Lancaster to buy back bonds at a discount.

The company said it had $127 million free cash at the end of November, an increase of $28m in the month.

It has repurchased $72.2m bonds since the end of November for a total outlay of $69m. That has left $79.8m bonds due for redemption in July 2022.

Brent crude has been trading at above the pre-pandemic level of $70 per barrel in recent weeks.

Hurricane faced challenges amid the plunge in oil prices triggered by the coronavirus crisis, to less than $40/bbl in April last year. The rollout of coronavirus vaccines helped fuel a recovery in the market.

READ MORE: North Sea firms to pay $1bn dividends as oil price rise boosts revenues

Hurricane made promising finds in a little-explored layer of granite West of Shetland, called the fractured basement. 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. Founding chief executive Robert Trice resigned in June last year.

Industry veteran Antony Maris became chief executive of Hurricane three months later.

Shares in Hurricane Energy closed up 0.41p at 4.44p. They sold for around 60p following the start of production from Lancaster.

READ MORE: £70m sale of Scottish oil services group triggers bumper payout for founder

Hurricane produced around 9,900 barrels oil per day from Lancaster on Tuesday, compared with an average 10,124 bopd in November.

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