Does Hurricane Energy PLC have more investment appeal than Tullow Oil plc, BHP Billiton plc and Cairn Energy PLC after update?

Is Hurricane Energy PLC (LON:HUR) (HUR.L) a better investment opportunity than Tullow Oil plc (LON:TLW) (TLW.L), BHP Billiton plc (LON:BLT) (BLT.L) and Cairn Energy PLC (LON:CNE) (CNE.L)?

Hurricane Energy
Hurricane Energy

Hurricane Energy PLC (LON:HUR) (HUR.L) has released an update regarding its H1 performance. It concluded a successful 265-day drilling programme in March 2017 which completed the well stock required for the Lancaster EPS. It also provided valuable reservoir data and increased the company’s resource estimates.

The company is on track for first oil in H1 2019. The second phase FEED studies have been completed and a number of key long lead items related to the FPSO have been ordered.

Hurricane Energy has also delivered a successful financing of $547 million, which will primarily be used to fund the capex required for the Lancaster EPS. It is now fully funded to first oil according to today’s update, with the business having cash at 30 June 2017 of $29.1 million.

The company made a loss after tax of $4.2 million in H1. However, its balance sheet has been strengthened post-period end following the completion of an equity and convertible bond placing in July 2017.

In the last year, the Hurricane Energy share price has fallen 32%. That’s a disappointing result for the company’s investors and lags other oil companies such as Tullow Oil plc (LON:TLW) (TLW.L), BHP Billiton plc (LON:BLT) (BLT.L) and Cairn Energy PLC (LON:CNE) (CNE.L). Tullow Oil is down 22%, BHP Billiton has gained 26% and Cairn Energy has fallen 3% in the last 12 months.

In my opinion, Hurricane Energy is making good progress with its drilling programme. It is on target to deliver first oil in 2019 and I think that between now and then investor sentiment has the potential to improve.

However, I feel it faces a difficult future due to the prospect of more volatility for the oil price. Therefore, I’d rather own a larger peer such as BHP Billiton, Tullow Oil or Cairn Energy at the moment, although I think Hurricane Energy does have some investment appeal for the long run.

About Robert Stephens 3883 Articles
Robert Stephens is a CFA Charterholder and an Equity Analyst by trade. He is a passionate private investor who has been buying and selling shares for many years, owning a wide range of UK shares in the process. He has written for Citywire and The Motley Fool US and now runs his own business. To contact Robert, please email [email protected] or use one of the other contact methods available on the 'Contact Us' page