Hurricane Energy has sunk to losses of $625.3m as it undergoes a financial restructuring following a challenging year for the West Shetland operator.
The company said the events of the last 12 months, including a writedown in reserves, had caused “upheaval and frustration” and had been “profoundly challenging”.
The losses for the year ended 31 December were in large part due to an impairment of $567.1m relating to its flagship Lancester field.
Shares in the company plummeted 7.8 per cent in early trading.
Hurricane Energy said Lancaster had produced an average of 14,900 bopd in 2020, but it was significantly less than expected due to “the field materially underperforming relative to pre-production expectations”.
The field was downgraded to having just 7.1m barrels of proven plus probable reserves through a report in April.
“The potential of the Lancaster field is much smaller than originally thought and cannot support the level of debt in the Company which was sized for a much larger Reserves and Contingent Resources base,” chief executive Antony Maris said.
Against this backdrop of lower-than-expected cash generation and reduced flows from Lancaster, Hurricane Energy announced a financial restructuring earlier this month.
It features a debt-for-equity switch that will dilute the value of existing shareholdings. The London-listed firm struck a deal with 69 per cent of the group’s convertible bond holders and will see $50m of the total £230m debt swapped for new shares.
Today Hurricane Energy said the proposed restructuring is expected to take place in June 2021.
“We understand the impact this will have on our shareholders and the strong feelings that have been expressed as a result, but this was a necessary move in order to secure the Company’s future,” Maris added.
Last week one of the company’s biggest shareholders, Crystal Amber, moved to oust several members of the company’s board with “immediate effect”.