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.
READ MORE: BP boss rejects calls for windfall tax after oil giant posts £9.5bn profit
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.
READ MORE: Bumper West of Shetland gas fields deal shows belief in potential of North Sea endures
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.
READ MORE: Shell eyeing North Sea gas developments following Cambo U-turn
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.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here