Conv bonds22 Apr 2021 11:35
From Reorg (provider of real-time news, commentary and analysis on issues affecting the distressed debt, event-driven and leveraged finance markets.):
"Holders of Hurricane Energy’s $230 million convertible bonds due July 2022 are expected to take control of the business as a result of a debt restructuring, sources close to the situation told Reorg.
The 7.5% notes will be partially equitized and partially reinstated, sources added. The plan does not envisage provision of new money, according to sources.
At March 31, the group had free cash of $127 million, comprising unrestricted cash and cash equivalents, plus current financial trade and other receivables, current oil price derivatives, less current financial trade and other payables.
Hurricane Energy is working with Evercore and Dentons as its financial and legal advisors. The convertible noteholders are working with Houlihan Lokey and Akin Gump, as reported.
On April 7, Hurricane said it was engaging with its convertible noteholders to potentially restructure or partially equitize the convertible notes. The group noted that if no agreement is reached with its stakeholders on additional development activity at the Lancaster field, it could continue to produce from the P6 wells before reaching its economic limit. The field could then be decommissioned with limited or no value returned to shareholders.
The company warned of potentially no further activity at the Lancaster field as drilling commitments are contingent on the group’s ability to fund and execute the development plan over the lifetime of the Lancaster field.
Hurricane reported average production of 11.2 kboe/d in the first quarter of 2021, down from 12.7 kboe/d in the fourth quarter of 2020 due to the company’s decision to reduce production from the P6 well in November 2020, natural declines and a temporary reduction in the production rate in early March 2020 which required an unscheduled well intervention.
In mid-September, 2020, Hurricane revealed that the size of its oil reserves could be less than half of what the group told investors during its 2017 fundraising. The company noted that it was writing down its oil reserves after a technical review of the oil fields in West of the Shetland Islands revealed a shallower-than-expected oil water contact at 1,330 meters and more rapid reservoir pressure decline. As a consequence, Hurricane’s estimated recovery from the two existing Lancaster early production system, or EPS, wells was revised down to 16 MMbbls from 37 MMbbls and the remaining 2P reserves now stand at 9.4 MMbls.
Hurricane’s shares are down 76% from one year ago, while its 2022 bonds are quoted around 48/50, according to Solve Advisors."
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