Hurricane Energy’s (LSE: HUR) share price soared on Wednesday following a major shake-up at the troubled oilie’s boardroom. The UK share was last 14% higher at 3.2p per share and trading at its most expensive since early April.
Hurricane rocketed yesterday after the High Court rejected the energy play’s restructuring plan. And enthusiasm for its shares has ballooned again as news emerged that chairman Steven McTiernan — in addition to non-executive directors John van der Welle, Sandy Shaw, Beverley Smith and David Jenkins — had all resigned their positions on Tuesday.
The UK oil share added that Alan John Wright and David Ian Craik had been appointed to the board as non-executive directors, with the former assuming the role of interim chairman.
Crystal Amber withdraws requisition
Hurricane Energy said activist investor Crystal Amber Fund had also withdrawn its requisition notice calling for a general meeting of shareholders on Monday, 5 July. Furthermore, resolutions proposing that McTiernan and Shaw be re-elected to the board at today’s AGM have been pulled.
Crystal Amber Fund had sent a requisition in May asking for the removal of McTiernan, Jenkins, van der Welle, Shaw and Smith as directors. It also called for the appointment of Wright and Craik as non-executive directors.
The fund claimed then that Hurricane’s board had “demonstrably failed to protect shareholders’ interests” in an explosive announcement. It also accused it of “[failing] to reconcile its earlier estimates of the value of Hurricane’s West of Shetland portfolio with its latest, downbeat assessment.”
Re-elections proposed
Finally, Hurricane Energy said it had re-elected Antony Maris and Richard Chaffe as directors of the company. That follows discussions between its largest shareholders and new non-executive directors. It said it would immediately re-appoint them as directors if re-election proposals aren’t passed at Thursday’s AGM.
These appointments “[would] ensure that the company is able to maintain its ability to safely and effectively operate as a listed business,” Hurricane said.
Should I buy Hurricane Energy?
Hurricane Energy has been in choppy waters in recent times. It has experienced significant production issues at its Lancaster offshore field in West Shetland. This left it with a whopping $230m worth of debt, which was due for repayment next July.
The company’s board proposed a plan for lenders to lop $50m off in exchange for 95% of Hurricane’s shares. But shareholders shot down the plans earlier this month. That led to the board’s failed attempt yesterday to get the High Court sign them off.
Would I buy Hurricane Energy shares today? No is the short answer. The UK oil share still has an enormous amount of debt that could eventually force its value to zero.
Shareholders might be hoping this week’s news represents a new dawn for the company. Or at least allow them to get a half-decent return on their investment. But the company is loaded with far too much risk for my liking.