Key points:
- The Hurricane Energy share price has risen 58.9% in 2022.
- The offshore oil company has undergone a massive turnaround.
- Is the Lancaster oil field about to be decommissioned?
- Read on to find out.
The Hurricane Energy PLC (LON: HUR) share price has risen 58.9% in 2022 despite the recent pullback that has seen its shares fall 32% since April. For many people, Hurricane Energy’s impressive performance is a case study of what a solid management team can do for a troubled company.
Also read: The Best Oil Stocks To Buy Right Now.
The UK offshore oil company’s troubles began last year when it was forced to slash the production estimates for its flagship Lancaster oil field after new data indicated that a significant portion of the expected oil reserves were not present and that the existing oil reserves would be exhausted in a few years.
Investors panicked, and many sold their shares in the company triggering a massive selloff in Hurricane Energy shares, which once traded at over 60p in June 2019, compared to its current price of 6.19p. As a result, the company’s management team devised a restructuring plan favouring its bondholders over shareholders.
A group of shareholders successfully opposed the restructuring plan in court and won, forcing the management team to resign. A new team started turning around the company’s fortunes in June 2021. A year later, Hurricane Energy will repay the last tranche of bonds worth $78.5 million in July to settle all its outstanding debts.
Hurricane Energy has a cash balance of $139 million as of 31 May 2022, which is enough to repay the outstanding bonds. In addition, the company continues to produce oil at its Lancaster oil field. It has set aside a significant amount of money for the well’s decommissioning once the oil reserves are exhausted.
Overall, the company and its shareholders have benefitted immensely from the new management team that took over last year. However, despite its impressive performance, HUR shares have been flailing in the last three months. One of the reasons for the decline could be fear that the firm is about to exhaust its Lancaster oil field.
Investors know that once the Lancaster field runs out of oil, Hurricane Energy will be liquidated since it will no longer have a going concern.
*This is not investment advice. Always do your due diligence before making investment decisions.
Hurricane Energy share price.
Hurricane Energy shares have fallen 32% in the past three months but are still up 58.9% in 2022.