HUR.L Share News (HUR)

(Sharecast News) - Analysts at Canaccord Genuity dropped their target price on oil and gas group Hurricane Energy from 24.0p to 16.0p and lowered the firm to 'speculative buy' from 'buy' following the company's decision to shut in one of its Lancaster production wells.
With Hurricane closing the well, leaving only one in operation for now, Canaccord said the move was damaging and raised wider implications than the immediate production drop.

In the Canadian broker's view, the setback increased both operational and balance sheet risks - despite the likelihood that the problems appeared not to be due to subsurface or facilities performance - simply due to the specific issues related to the company having two wells producing in such close proximity.

Canaccord said its previous target price was founded on near-term production levels of 17,000 barrels of oil per day in 2020 and 18,000 bopd in 2021.

However, the group's lower near-term production outlook resulted in lower valuations for each scenario, given the risks related to the present single well production outlook.

"The combination of increased operational and balance sheet risk, leads us to reduce our rating to SPECULATIVE BUY and our TP to 16p."