Hurricane Energy shares: 4 things to watch ahead of interim results

Hurricane Energy (LON: HUR) has two primary oil and gas projects: The Lancaster EPS Development (GLA) and the Spirit Energy farm-in (GWA). The Lancaster Development has already showed great promise, achieving first oil earlier this year.

In spite of this progress, the company’s shares have traded flatly year-to-date, though the stock remains overwhelmingly liked by analysts.

With this in mind, below we take a look at four things investors and traders should consider before Hurricane Energy reports its interim results.

When will Hurricane report its results?

Hurricane Energy (LON: HUR), the UK-based gas and oil company is expected to report its 2019 interim results next Friday, on September 20.

What can investors expect from Hurricane’s results?

With Hurricane Energy reporting the broad strokes of its first and second quarter performance in its Corporate Presentation earlier this year, investors already have some indication of how the energy company has performed in the 2019 first-half.

Even so, investors will likely be keen to gain more in-depth insight into the company’s financial performance next week, including further details on the company’s revenue, cashflow and OPEX.

Maybe most importantly for a company that remained pre-revenue in FY18, in Hurricane's latest Corporate Presentation, it reiterated its first-half guidance for 1H19, noting that it expected revenues of $22 million.

In the company’s latest presentation, Hurricane Energy also reported that it had 81.0m cash on hand and debt (convertible bonds) of $230m due 2020, as of June 30, 2019.

Overall, the company made a point that production is:

‘Expected to gradually increase through 2019 to initial long term target of 17,000 bopd.'

With optimal operational efficiently, notes the company, this could reach as high as 20,000 bopd. Any further commentary surrounding future guidance, or a guidance upgrade – as was the case in July – is likely to be closely watched by investors next week.

Hurricane share price and a post-revenue world

With Hurricane Energy (LON: HUR) moving from strength-to-strength in recent times, the company looks well placed to make good on the promise first made in its FY18 report, namely that the ‘financial statements presented in Annual Report will be Hurricane’s last with no revenue.’

Striking first oil at the Lancaster EPS Development (GLA), on August 17, ranks as a key step in reaching this goal.

Indeed, since first striking oil, Hurricane has seen an ‘average production rate of c. 14,400 barrels of oil per day’ and has sold 1.2 million barrels of crude oil thus far.

Though promising, the company pointed out that in the near-term ‘production and availability are likely to be constrained as certain planned works and delayed data gathering activities will require periods of production shut-in.’

Previously, the company noted that it would 'update the market on initial results of the well, including flow rates and oil type, following completion of the ongoing testing phase.'

Finally, while Hurricane’s Spirit Energy farm-in GWA doesn’t expect to strike first oil/ gas until around Q4 FY20 to Q1 FY21, any comments regarding its progress will likely be welcomed by investors during the interim results annoucment.

What are analysts saying?

Heading into the interim results, analysts look to be incredibly bullish on the small energy company. Of the 11 analysts covering the stock, an overwhelming 10 rate it a buy, while only one analyst rates it a hold, according to Bloomberg Data.

Stifel, in particular has hit Hurricane with price target of £120 per share. On today’s share price, this would imply significant potential upside of around 160%.

The lowest price target, by comparison, comes from RBC Capital Markets. RBC analysts predict Hurricane’s share price could hit £70 per share.

Overall, and year-to-date, Hurricane Energy (LON: HUR) shares have done little to evoke investor enthusiasm – rising from £44.80 to £45.44 per share. In saying that, there has been bouts of optimism.

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