WEST of Shetland-focused Hurricane Energy has seen a dissident investor increase its stake in the business significantly after plans for a controversial restructuring were blocked.
Hurricane Energy sparked outrage among investors after announcing plans to compete a debt-for-equity swap that would have left bondholders in control of the business.
However, the High Court declined to approve the plan on the grounds that it would have deprived shareholders of all but a fraction of their equity and appeared to be premature.
The decision was hailed as a victory for shareholders that had opposed the plan. These were led by the Crystal Amber Fund investment operation, which agitated for a boardroom coup.
READ MORE: Boardroom upheaval at Shetland oil firm after shareholder revolt
A regulatory filing showed yesterday that Crystal Amber Fund has increased its holding in Hurricane Energy shares in the wake of last week’s High Court decision, to 23 per cent of the total, from 14.3%.
The acquisition will put Crystal Amber Fund in a stronger position to influence developments at Hurricane. The oil company announced on Wednesday that chairman Steve McTiernan and four non-executive directors had resigned. Crystal Amber Fund had sought the removal of the five people concerned. Two replacements nominated by Crystal Amber Fund were appointed to the board.
The latest share purchase by the fund signals confidence in the prospects of Hurricane, although the company is facing big challenges.
Hurricane made promising finds in a relatively under-explored area of granite off Shetland. Since starting production from the Lancaster field in June 2019, the firm has suffered some big setbacks. It has slashed estimates of the size of Lancaster and other finds and been hit by the fallout from the coronavirus crisis.
READ MORE: Plan for bumper Shetland oil field development poses questions for regulator
The company’s stock market valuation plunged from £1.2 billion to less than £50m. After selling for 60p in 2019, shares in the firm fell to a low of less than 1p in May this year. The paper value of Crystal Amber’s 14.3% stake fell accordingly.
However, Mr Justice Zacaroli noted last week that Hurricane is still trading profitably.
Hurricane Energy shares rose around 16 per cent yesterday to close up 0.57p at 4.09p.
READ MORE: Majority think North Sea oil and gas production should be halted
The Brent crude price has risen strongly amid the roll out of coronavirus vaccines. Brent crude sold for $76.82/bbl yesterday afternoon, up $0.65/bbl on the day.
Opec members had been expected to agree yesterday to boost production in response to increased demand.
A meeting to agree new production levels was postponed yesterday following reports of disagreement between Saudi Arabia and the United Arab Emirates about how quickly production should be allowed to increase.
Opec members and Russia agreed last year to curb production to support the market.
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