Shares of Hurricane Energy PLC (LON: HUR) today fell 52% after the company reported a $307.7 million loss for the first six months of 2020. The biggest contributor to the company’s losses was a $238.9 million impairment charge against its Lancaster oil field.
The energy company had issued a profit warning last month after it was forced to materially downgrade the oil production targets within some of its projects in the West of Shetland due to lower production at the Lancaster oil field.
The early production system (EPS) at Lancaster produced an average of 14,600 barrels of oil per day (bpd) generating $81.9 million in revenues of with operating cash flows of $21.9 million. The company expects oil production at Lancaster to remain largely stable between 12,000 and 14,000 bpd for the rest of the year.
Hurricane’s revenues were also adversely affected by low global crude oil prices given the lower demand and the excess supply that has seen oil prices steadily decline. The low prices will continue to have a negative impact on the company’s revenues going forward.
Hurricane Energy share price
Hurricane energy shares today crashed 52% to trade at 3.02p having ended Thursday’s session trading at 6.29p.
Steven McTiernan, Hurricane’s Chairman said: “2020 is proving to be a hugely challenging year for Hurricane. We have had to contend with not only a significant fall in oil prices and the effects of the COVID-19 pandemic, but also poorer than expected reservoir performance from the Lancaster EPS.”
Anthony Maris, the incoming CEO, added: “Following the uncertainty of recent months, as the significance of the EPS reservoir performance has become clearer, we must now focus on extracting value from Lancaster and our other discoveries while optimising the use of our significant installed infrastructure West of Shetland.”