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Hurricane Energy Shares Edge Higher on H1 Results. What Next?

Simon Mugo trader
Updated 30 Sep 2022

Trade Hurricane Energy Shares Your capital is at risk

Key points:

  • Hurricane Energy shares edged higher on H1 results but were muted.
  • Investors barely reacted to the highly positive H1 earnings report.
  • So, should you buy HUR shares? Read on to find out.

The Hurricane Energy PLC (LON: HUR) share price edged higher after releasing its financial results for the six months ended 30 June 2022. The oil and gas company generated $159.5 million in revenues during the period, an improvement from the $124.5 million generated in a similar period last year.

The company noted that this year’s revenues were generated from three liftings of oil cargo from the Lancaster oil field compared to last year’s four in H1 2021. Therefore, the company’s revenues would have been much higher than the figures reported. Unfortunately, investors missed this crucial difference that could have resulted in a much bigger rally in HUR shares.

Also read: Best Oil Stocks To Buy Now.

Hurricane Energy generated $110.1m of operating cashflows equivalent to $67.5/bbl versus 2021’s $75.9m cashflows equivalent to $37.9/bbl. The higher oil prices drove the company’s improved margins this year, while its costs remained unchanged.

The UK oil and gas company repaid convertible bonds worth $78.5 million Convertible Bonds in addition to $1.5 million of accrued interest after the period ended to become debt free finally. The move marks a critical turning point for Hurricane Energy, which was on the verge of bankruptcy a year ago.

The company had a net free cash flow of $126.9 million on 30 June 2022, which later fell to $76.6 million as of 31 August 2022 after it repaid the convertible bond. However, the cash figures were still better than the company’s $51.5 million free cash on 31 December 2022.

Hurricane Energy had $60.8 million in restricted cash on 30 June 2022, which was set aside to cater for the decommissioning costs of the Aoka Mizu once the oil and its Lancaster oilfield run out in future.

Investors ignored the most critical aspects of Hurricane Energy’s earnings, including that it lifted one less oil cargo ship in 2022 than last year. As a result, the company repaid its debts and was left with free cash flow.

Today’s price action indicates that the markets had already priced in the positive aspects of the H1 Results. So, should you buy Hurricane Energy shares? The short answer is it depends on your thoughts about how much further the oil at Lancaster can last.

*This is not investment advice.

Hurricane Energy (HUR) share price.

Hurricane Energy share price 30-09-2022
Source: IG

The Hurricane Energy share price surged 2.74% to trade at 7.798p, rising from Thursday’s closing price of 7.590p.

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading