Hurricane Energy (LON: HUR) is ready to pay off its debt next week with cash to spare, in a remarkable turnaround in fortunes over the last year.
The West of Shetland oil and gas operator said it will pay off the remaining $78.5m of convertible bonds to lenders by July 24.
Assuming oil prices remain at more than $90 per barrel, London-listed Hurricane Energy expects to hold net free cash in excess of $75m. If prices remain above $110 then the cash forecast increases to above $85m.
It’s a far cry from this time last year when the firm had seen its restructuring plan rejected by a judge and several directors jump ship – all stemming from huge downgrades to its resource at the flagship Lancaster field.
Around that time, Hurricane was looking at a wind down from Lancaster and having to repay a total of $230 million to bondholders.
But the price of Brent crude oil has surged from around $40 in July 2021 to over $100 today, giving Hurricane a welcome shot in the arm.
The Lancaster field is expected to continue production into 2024.
Shares in Hurricane Energy are up 11% over the last week to 7.3 pence.
In a trading update, Hurricane said it expects to reduce the frequency of its production updates to quarterly, rather than monthly, once the bond repayments are complete, in line with industry practice.
As of July 16, Lancaster was producing at around 8,650 barrels of oil per day.
CEO Antony Maris said: “With another steady month of production, we now look beyond repayment of the bonds with a strong cash position and balance sheet.
“We believe that there are good investment opportunities ahead and the company is well placed to deliver significant shareholder value.”