Shares of Hurricane Energy PLC (LON: HUR) are up 29% in 2021 despite facing challenges at Lancaster when planning to drill a side track to the main well, which was scheduled to start in the summer.
The oil company encountered major challenges and informed shareholders that it would have to postpone its production plans into 2022, which will significantly impact its revenues given that it initially expected to start producing oil from the well later this year.
Technically, Hurricane Energy shares are still trading within a range after falling last week, but they are at the upper half of the range. The chances of a breakout are there, but the company is uncertain, which does not bode well for its shares.
Hurricane Energy could retest the support level at the bottom of the range, especially if the company makes a negative announcement, which is quite likely. The postponement of drilling plans could hurt its revenues.
The last time we covered Hurricane shares, we noted that they were very likely to rally higher and hit the top of the range, which they did, creating a selling opportunity. However, the resulting downtrend was quite shallow, and it seems like the buyers are keen to push the stock higher.
I would look to buy at the bottom of the range, or once the shares break above the upper resistance level, maybe driven by positive announcements that could trigger a fresh rally above the trading range.
Hurricane Energy’s management clarified that it would be impossible to drill the well during the summer weather window without significant operational and costs risk; hence, deciding to postpone the drilling programme.
I’m staying away from the shares until we get solid guidance from the company’s management team, which said that it is working on an alternative production schedule.
Hurricane Energy share price.
Hurricane Energy shares are up 29% despite the drilling challenges at Lancaster. Can they rally higher still?