First-half results from Hurricane Energy (LSE: HUR) gave the oil explorer’s shares a modest boost on Thursday, helping take the price up 80% since the beginning of 2018. But we saw even higher levels in 2017, so is the current bull run here to stay?
The company has been concentrating its efforts on its Lancaster Early Production System (EPS) development, and chief executive Dr Robert Trice told us he is “delighted to report that operations have progressed to plan and within budget, allowing us to reiterate our first oil guidance of H1 2019.“
We’re looking at a post-tax loss of $75.1m for the six months, but that was partly due to a one-off related to the firm’s convertible bond, and operating expenses came in at $4.7m.
Profit when?
The big question is whether the cash will last, and at 30 June there was reportedly $210.1m of cash equivalents and liquid investments on the books. That’s despite a net decrease of $149.4m in the period, but most of that was investment in the Lancaster EPS — cash outflow from operations was stated at $2.7m.
The big difficulty is valuing the shares with a view of whether to invest, and a lot of that will be down to gut feelings for experience oil investors. I’m not one of them and I’m keeping away for that reason. But if the Lancaster EPS really is as close to first oil as it seems, I think Hurricane could well be less risky than some.
High-flyer
If you want a more impressive oil share price rise, take a look at Eland Oil & Gas (LSE: ELA). Eland is up a bit less so far this year, at 70%, but over the past two years shareholders have seen their investment more than treble in value. That’s after my colleague Harvey Jones suggested a year ago that Eland could do well if the oil price recovery proved sustainable.
Eland is also different in that it’s in profit, with forecasts for big EPS rises putting the shares on forward P/E ratios of only around four and less.
We had first-half results from Eland on Thursday too, reporting on a period that chief executive George Maxwell described as “the most important operational and financial period in Eland’s history.”
Record production
It included record high gross production from the firm’s OML 40 prospect of 25,000 bopd, thanks to success at its Opuama-8 and Opuama-9 wells. Average gross production came in a little lower, but at a still impressive 17,146 bopd.
Gross proved (1P) reserves have been uprated by 20% to 39.5m barrels, with gross proved plus provable (2P) reserves up a little to 83.4m barrels.
With a reported post-tax profit of $44.7m, operating cash flows of $50.6m and cash on the books of $29.8m, I see Eland as one that could seriously tempt oil investors.
