RE: Hur31 Jan 2020 11:35
Proactive investors don’t help
the market today, with a share price of around 22.68p, Hurricane is worth around to £450mln.
That would appear a handsome valuation for Hurricane merely as a ‘producer’, at least compared to some of the UK’s larger more established peers. So, let’s put that in context.
Market value out of sync with other UK producers
Wednesday’s Q3 trading update showed Hurricane’s production rate “ahead of guidance” at 11,800 bopd.
Hurricane is therefore valued at a premium to EnQuest Plc (LON:ENQ) – at 24.65p per share its worth around £420mln - which produces close to 70,000 boepd and generates over US$1.6bn of annual revenue.
After that, comes Tullow Oil PLC (LON:TLW) – at 52.32p is worth £735mln – which even amidst its current existential crisis and change of management still produced over 86,000 boepd last year to generate around US$1.7bn of revenue.
Premier Oil PLC (LON:PMO) – at 106.30, worth just shy of £900mln - is similarly dealing with its own corporate matters in an attempt to close a major North Sea acquisition, but it still produced some 85,000 boepd in 2019 and September’s interim results showed it generated US$871mln in first-half revenue. (Premier’s latest acquisitions should eventually see it produce over 100,000 bopd and generate in excess of US$1bn of free cash flow).
Then there’s Cairn Energy (LON:CNE) which is something of an anomaly – at 173p its worth just over £1bn – though only because it, eventually, hopes to receive a US$1.4bn settlement from long-running arbitration in India. Allowing a discount for risk, you could possibly make a case that Cairn’s current 23,000 boepd of annual production factors only slightly in the market’s valuation.
Now, nobody is suggesting that any of the above is a deep like-for-like peer analysis, but it does quite quickly show that if viewed solely as an oil producer, Hurricane is punching way outside its weight class.
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