Hurricane - Comments

Hurricane have purchased over the last two days $43.5m of outstanding bonds at a small discount reducing the outstanding balance to $108.5m. This has likely been funded by the 26th cargo lift that was due to take place in late November early December. The cargo lift would likely to $40m Gross revenue (2 months production) which equates roughly to the $41.3m costs of the bond purchases.

Net free cash, as at end of October was $99m, which will be reduced by November's operating costs of c.$8-9m, so best guess Free cash, adjusted for the buybacks is c.$90m. Outstanding bonds, net of buybacks, is $108.5m with $4m of interest due in January.

But the reason we haven’t invested remains the same - uncertainty surrounding production. The underlying problem with Hurricane is the fact that the wellhead flowing pressure in the Lancaster reservoir may become unstable as we approach the end of life. Management previously confirmed (September 2021) that the pressure may reach the bubble point by the end of Q1 2022, consistent with the time range previously announced in May 2021. This uncertainty and its impact make future production guidance near on impossible.