Hurricane Energy - Positive results ahead of unprecedented times

Hurricane Energy recently reported its first year of production and revenues from the sale of oil produced from the Lancaster early production system (EPS). The company reported FY19 revenue of c $170m, in line with our previous estimates. In this note we update our valuation to reflect FY19 results and the current oil and gas industry macroeconomic situation. The coronavirus (COVID-19) and the Russia/Saudi Arabia price war have affected oil and gas global supply and demand and consequently oil prices. Our mid-case risked valuation has decreased to 73.0p/share from 109.9p/share (-34%) as we adjust our short- and long-term oil price assumptions and update our forecasts to reflect Lancaster's accelerated programme, and removal of the Great Warwick Area (GWA) tie-back.