Key points:
- Hurricane Energy shares have risen 150.5% in 2022. Will they keep rising?
- The rally was fueled by higher oil prices and the Aoka Mizu charter extension.
- As a result, investors should look out for pullbacks as buying opportunities.
The Hurricane Energy Plc (LON: HUR) share price has risen by 150.5% in 2022, leaving many wondering whether it can keep rising? Read on to find out what we think will happen to the HUR share price…
Also read: The Best Oil Stocks To Buy Right Now.
Investors familiar with Hurricane Energy’s past know that the North Sea offshore oil company barely escaped sinking into receivership and a looming liquidation by a whisker in mid-2021, which led to the last management team resigning.
A new team took over the company’s management and started turning around its operations with a focus on reducing its debt burden by repaying the $230 million convertible bonds due 24 July 2022.
Under the new management, Hurricane Energy has repaid most of the bonds and had an outstanding balance of $78.5 million at the end of January 2022. In addition, the company reassured investors that it would repay the outstanding balance by the 24 July 2022 deadline.
Hurricane Energy recently announced that it had signed a deal extending the Bareboat Charter for the Aoka Mizu vessel to extract oil from its offshore locations. The vessel is owned by Bluewater (Aoka Mizu) BV, with the current contract expiring on 4 June 2022.
The new contract covers the entire life of the Lancaster oil field, eliminating the uncertainty associated with the vessel’s availability past the previous expiry date. Additionally, Hurricane will continue paying the vessel’s day rate and tariff of $75,000 and 8% of revenues generated.
Hurricane and Bluewater agreed to give each other a six month notice period before terminating the charter. The oil company also set aside $18.7 million in a secure deposit account to cover the costs associated with the day rate for the six-month notice period and the Aoka Mizu’s decommissioning costs.
Hurricane Energy also recently signed a financing deal with BP Oil, which buys its crude oil for a financing facility, allowing it to access much-needed cash before lifting its crude oil cargo. The company usually supplies BP with its crude oil after a few months to deliver a significant amount of crude oil.
Antony Maris, Hurricane Energy’s CEO, commented: “Securing the extension to the FPSO contract is an important next step forward. It was key that we found a mutually acceptable deal that will enable the company to continue production beyond repayment of the bond. Based on the current oil price and field performance predictions, we forecast this to be at least 18 months from 4 June 2022.”
Adding:
“With production continuing in line with our projections, good uptime performance on the FPSO and assuming oil prices are in the range $90-110/bbl, we believe that post clearing our bond debt and after funding the Bluewater secured deposit account, Hurricane will have between $50-80 million of net free cash at the end of July 2022.”
For those wondering whether HUR shares shall keep rising, the short answer is that they could. However, the gains from here might be limited given its recent rally. I would buy HUR shares on a pullback to the 8p support level.
*This is not investment advice. Always do your due diligence before making investment decisions.
Hurricane Energy share price.
Hurricane Energy shares have risen by 150.53% in 2022. Can they keep rising?