Hurricane at risk without shorter FPSO charter

Hurricane Energy plc said it needed a shorter charter for the Aoka Mizu FPSO than initially agreed to avoid winding down and halting operations at the Lancaster field.

COSTS

The three-year initial term of the charter expires in June 2022 unless the oil and gas company meets the 4 June deadline to extend for three years to June 2025.

Hurricane added that the extension was not in the best interests of the company and its stakeholders because of the “significant financial obligations” and had “resolved not to do so.”

From today, the charter day rate increases from $25,000 to $75,000 per day.

If the company had exercised the option to extend the charter, the early termination fee would have increased from $18.8 million to $56m.

Hurricane said that there was a “reasonable prospect” of negotiating a shorter extension with owner Bluewater Energy Services.

“However, there is no guarantee of an extension of the existing contract on acceptable terms.

“In such an outcome, Hurricane may need to pursue a controlled wind-down of its business and cease operations at the Lancaster field upon the expiry of the bareboat charter in 2022, at which point the field would be decommissioned.”