Hurricane Energy plc has signed a contract to extend the bareboat charter to cover the remaining economic life of the Lancaster oil field, West of Shetland.
TERMS
The contract with Bluewater (Aoka Mizu) B.V., owner of the Aoka Mizu FPSO, was due to expire on 4 June 2022.
Hurricane said that either party could give six months’ notice to terminate the charter.
The existing day rate and tariff for the vessel remains at $75,000 per day and 8% of revenue respectively.
Hurricane has agreed to establish a secured deposit account of up to $18.7 million for the benefit of Bluewater.
This will cover the costs associated with the day rate for the six-month notice period and decommissioning in respect of the vessel.
FINANCES
Hurricane has also negotiated a facility with the purchaser of its crude oil, BP Oil International, for cash advances ahead of a lifting.
This will create more frequent cash receipts and assist with Hurricane’s working capital.
The facility incurs a financing fee that is only payable if the company uses it.
FUTURE ACTIVITIES
Chief executive Antony Maris added that the company had to find a mutually acceptable deal to allow Hurricane to continue production beyond repayment of the bond.
“Based on the current oil price and field performance predictions we forecast this to be at least 18 months from 4 June 2022.
“With production continuing in line with our projections, good uptime performance on the FPSO and assuming oil prices are in the range $90-110/bbl, we believe that post clearing our bond debt and after funding the Bluewater secured deposit account, Hurricane will have between $50-80 million of net free cash at the end of July 2022.
“Against the backdrop of our demonstrable operational track record, financial discipline and the significant rise in oil prices, we are preparing Hurricane for the future.”
Mr Maris also welcomed the Government’s renewed emphasis on security of supply.
“We are working hard to identify how best to optimise capital allocation in future activities to build further value for our shareholders, whether through further investment in our existing portfolio, or in new opportunities in the UK oil and gas sector, or both.”