STRUGGLING Shetland oil pioneer Hurricane Energy is facing a multi-million dollar bill to plug a well although it has overcome a production setback.
Hurricane achieved renown after making promising finds West of Shetland but has faced huge challenges after suffering problems on the flagship Lancaster field, following which it slashed estimates of the size of the finds.
The company is seeking court approval to complete a debt for equity swap that directors have said is the only realistic option open to the firm but which shareholders have opposed.
The restructuring would leave bondholders with 95% of the shares in Hurricane. It is due to repay $230m (£160m) bonds next year.
The company said yesterday that it has contracted a rig to plug a well that was drilled to appraise the Lincoln find in September 2019.
The costs of plugging the well are expected to total around $13m. Half of the total will be paid by the Spirit Energy business, which is owned by Centrica. Spirit bought into Hurricane’s acreage in 2018 and agreed to fund $180m drilling costs. The results failed to live up to expectations.
Centrica put its majority stake in Spirit up for sale in 2019.
Hurricane also announced yesterday that it has restarted a pump on the Lancaster field that tripped last week.
The company had continued producing oil from the well concerned at natural flow rates, without the support provided by the pump.
It said yesterday: “Once stabilised, the Company intends to target oil production from the P6 well at a rate of c.11,000 bopd (barrels oil per day), being a similar level to that achieved immediately prior to the trip … Thereafter, oil production from the P6 well is expected to continue declining.”
At a meeting held last week the restructuring that Hurricane directors have proposed the firm should complete was supported by 100 per cent of the bondholders that voted. These represented 84.89% of the total value of bonds outstanding.
At a meeting of shareholders some 92% of votes cast opposed the proposed restructuring.
It will be considered at a High Court hearing that is scheduled to start on June 21.
Hurricane had noted previously that the court could sanction the restructuring even if it were to be opposed by shareholders.
Shares in the firm sold for 1.23p yesterday. They fetched 60p after Hurricane started production from Lancaster in 2019.
Surrey-based Hurricane was founded by geologist Robert Trice to focus on a relatively under-explored layer of granite. This lies beneath the sandstone that most explorers working in the wider North Sea area have focused their attention on. Mr Trice resigned as chief executive of the firm in June last year.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here