Hurricane Energy, which focuses on retrieving oil from complex geological structures in the North Sea, proposed a debt restructuring including a debt-to-equity swap on April 30, as it fights for survival after downgrading its flagship field.
The plan effectively gives its creditors control of the company and the announcement drove its share price down to a record low of 1.39 pence.
“Current financial projections show we will not be in a position to repay our convertible bonds at maturity from Lancaster Field cash flows,” CEO Antony Maris said.
“We acknowledge that this proposed course of action entails significant dilution for our existing shareholders, but it marks an important and necessary step in the company’s efforts to secure a viable capital structure.”
Hurricane has entered a lock-up agreement with creditors holding 69% of its $230 million bonds due July 2022 which would see $50 million of debt converted to shares “comprising 95% of the fully diluted pro forma equity of the company immediately following the restructuring,” it said.
The remaining debt's maturity would be extended to December 2024.
Hurricane's shares were down 35% by 0806 GMT, slightly above the 1.39 pence hit earlier, giving it a market capitalization of around $64 million.
Last June, Robert Trice resigned as CEO after the company gave up its ambitions to produce 20,000 bbl/d. In September, Hurricane slashed reserves estimates at its flagship Lancaster Field.
Trice was a proponent of the so-called fractured basement method, which involves recovering oil from fractures in hard and brittle rock, which some see as a risky way to obtain crude.
Recommended Reading
Equinor Acquires Stake in Standard Lithium Smackover Projects
2024-05-08 - Equinor’s transaction, completed effective May 7, includes interests in Standard Lithium’s flagship South West Arkansas Project and East Texas properties.
Crescent Point Divests Non-core Saskatchewan Assets to Saturn Oil & Gas
2024-05-07 - Crescent Point Energy is divesting non-core assets to boost its portfolio for long-term sustainability and repay debt.
Permian Resources Adds More Delaware Basin Acreage
2024-05-07 - Permian Resources also reported its integration of Earthstone Energy’s assets is ahead of schedule and raised expected annual synergies from the deal.
Evolution Petroleum Sees Production Uplift from SCOOP/STACK Deals
2024-05-07 - Evolution Petroleum said the company added 300 gross undeveloped locations and more than a dozen DUCs.
Riley Exploration Permian Closes Delaware Basin Bolt-on
2024-05-08 - Riley Exploration Permian said it added 13,900 acres and up to 25 net locations in Eddy County, New Mexico.