SHETLAND-focused Hurricane Energy has seen its shares surge around ten per cent from a low base after highlighting the boost that it has enjoyed as a result of the recent rise in oil prices.

Four months after the High Court blocked a proposed debt-for-equity swap that would have left creditors in control of the firm, the company’s position looks much brighter following the improvement in market conditions that has accompanied the easing of lockdown measures.

Hurricane faced big challenges after slashing estimates of the size of finds it made only to find oil prices plunging amid the pandemic. Directors decided the restructuring blocked by the court was the only realistic option open to the firm.

However, Hurricane said yesterday it generated a profit of $42 million in the first half of this year. The company lost $302m in the same period last year following the write downs.

The improvement in its trading fortunes reflects the benefit of the strong increase in crude prices seen since the third quarter of last year, amid the roll-out of coronavirus vaccines.

READ MORE: Case for developing big find off Shetland strengthened by oil price rise 

After falling below $20 per barrel in April last year, the Brent crude price rose to a three-year high of $84.52/bbl on Monday.

As Hurricane’s production costs averaged $24.80/bbl in the first half it was able to generate plenty of cash from its output

Last month the company used some of the cash it had accumulated to repay a third of the $230m bonds it had outstanding at a discounted price, for an outlay of $62m.

Chief executive Tony Maris said yesterday: “Recent stronger oil prices combined with the impact of the bond buyback, internal cost cutting, and other cost reduction measures, has brought the possibility of bridging the funding gap for the repayment of the bonds within reach.”

He added: “We are optimistic that, despite the economic and operational uncertainties that exist, even if a shortfall remains it may be possible to find a solution to repay the bond in full at maturity.”

HeraldScotland: Hurricane Energy chief executive Antony MarisHurricane Energy chief executive Antony Maris

The improvement in the company’s fortunes will be welcomed by sector watchers.

However, it may not be strong enough to allow Hurricane to realise the potential that backers saw in its acreage in full. Mr Maris noted: “The challenge of funding investment in our assets remains.”

Hurricane generated huge excitement about the potential of the relatively under-explored West of Shetland area after bringing the Lancaster discovery into production in 2019.

Output from the field plunged after the company suffered problems with a well.

While the Spirit Energy business owned by Centrica bought into the Greater Warwick Area (GWA) acreage held by Hurricane, a drilling campaign the firms completed on it produced mixed results.

READ MORE: Aberdeen-based Spirit Energy for sale as Centrica warms to nuclear

Hurricane said yesterday that it continues to evaluate options to bolster production from the Lancaster field, in addition to engaging with GWA stakeholders on possible pathways towards development for the Lincoln discovery.

Centrica put its majority stake in Spirit up for sale in 2019 but has not found a buyer.

Hurricane Energy shares closed up 0.42p, at 4.54p, yesterday

They sold for around 60p in 2019 after the company started production from Lancaster.

Hurricane produced an average 11,100 barrels of oil per day (bopd) from Lancaster in the first half, against 14,600 bopd last time. It reaffirmed guidance that production for the six months from October 1 is expected to be in the 8,500 - 10,000 bopd range.

Surrey-based Hurricane was founded by geologist Robert Trice to focus on a layer of granite known as the fractured basement. In June last year Mr Trice resigned as chief executive.

READ MORE: Orkney oil terminal to be transformed into hydrogen production complex

This June Hurricane parted company with its chairman and four directors after facing a boardroom coup attempt led by a dissident investor.

Steve McTiernan resigned as chairman along with all four non-executive directors.

After leading opposition to the debt-for-equity swap proposed by Hurricane, Crystal Amber Fund had called an extraordinary general meeting at which it wanted shareholders to vote Mr McTiernan and the four non-executives off the board and appoint two replacements.

The fund’s nominees, Alan Wright and David Craik, were appointed to the board as non-executive directors in June. Mr Wright is interim chairman of Hurricane’s board.

In its annual results statement last month Crystal Amber Fund said it had taken decisive action to protect shareholder value at Hurricane Energy.

Philip Wolfe , who has held senior roles at oil and gas firms and investment banks, joined Hurricane’s board as a non-executive director on Wednesday. Mr Wolfe is a former head of HSBC’s global oil and gas business.