The Hurricane Energy share price tanks 15%! This is what you need to know

The Hurricane Energy share price has tanked on news concerning its Lancaster oilfield. Here are the key points that have sent investors packing.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

UK share markets are stepping tentatively higher in Tuesday business. Both the FTSE 100 and FTSE 250 are up fractionally as hopes over the economic recovery keep investor appetite bubbling. But the Hurricane Energy (LSE: HUR) share price hasn’t fared quite so well after it released its latest operational update.

Hurricane Energy has slumped after announcing drilling problems associated with its Lancaster field in the North Sea. It plunged below 3p per share earlier on Tuesday morning, its cheapest for around a month. While recovering some ground, it was last trading around the 3.15p marker, down 15% on the day.

Stormy weather

Hurricane Energy announced plans in December to drill a second production well as part of its development plan for Lancaster. This would involve side-tracking from its existing 205/21a-7z well into the central area of the field.

However, the complexity of the operation means that Hurricane Energy doesn’t now expect to be able to begin the work during the summer. It said that “the incorporation of an intelligent completion and the challenges of delivering the well trajectory from the side-track location” meant that creation of the side-track would be trickier than work at other wells at Lancaster.

Hurricane Energy thus concluded that “it will not be possible to drill this well during the 2021 summer weather window without unacceptable operational and cost risk.

The business suggested in December that maiden oil from this second well should begin flowing by the end of 2021. It estimated development costs of $60m back then too.

Hurricane Energy rolls out other options

The oil explorer said that it has yet to make definite decisions as to how to proceed. However, it suggested that drilling of the second well now won’t happen until 2022.

Hurricane Energy said that there were various options on the table regarding how to proceed. It could continue planning in 2021 with a view to drilling the side-track next year, it said. The business has also touted drilling the side-track at the same time as a water injection well in 2022 as a combined programme. It is also looking at drilling the side-track in 2022 and a water injection well in 2023.

Hurricane Energy said that the development of Lancaster might depend on factors outside its control. These include “field performance, prevailing oil prices and support from relevant stakeholders and counterparties,” it said.

The company is now engaged in discussions with stakeholders regarding a proposed development plan, as well as funding of work at Lancaster. These stakeholders include a group of convertible noteholders. It added that “discussions on the company’s forward work programme, strategy, financing and balance sheet recapitalisation are ongoing.”

City analysts had been expecting Hurricane Energy to flip from losses of 0.4p per share in 2021 to earnings of 1.4p in 2022 prior to today’s update.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Just released: Share Advisor’s latest ‘Hold’ recommendation [PREMIUM PICKS]

In our Share Advisor newsletter service, we provide buy, sell, and hold guidance for our universe of recommendations.

Read more »

Investing Articles

Investing £5 a day could help me build a second income of £329 a month!

This Fool explains how £5 a day, or one less takeaway coffee, could help her build a monthly second income…

Read more »