Edison Investment Research Limited: Edison issues outlook on Hurricane Energy (HUR)

London, UK, 11 June 2018

Edison issues outlook on Hurricane Energy (HUR)

The development of Hurricane's Lancaster early production system (EPS) remains on track for H119 first oil. We estimate a 1 January 2018 point-forward IRR of 63% for the EPS phase based on current commodity price forecasts. We use the EIA's short-term oil forecast with Brent at $66/bbl for 2019 and long-term $70/bbl (from 2022). We believe the market is fully valuing a 10-year Lancaster EPS phase (34.7p/share net of debt), a project that has the potential to significantly de-risk our RENAV of 81.0p/share (increased from 78.4p/share). Our RENAV includes a risked value for Lancaster full field development and two mid-sized field developments (250mmbo) at Lincoln and Halifax.

Our RENAV stands at 81.0p/share (up 3% from 78.4p/share) as we mark to market for EIA 2019 oil price assumptions and increase our EPS commercial chance of success from 90% to 100%. We continue to include 10% capex cost contingency, which we expect to release closer to first oil.Click here to view the full report.

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