CPR on Lancaster Field & 2022 Production Guidance

RNS Number : 3441I

Hurricane Energy PLC

14 April 2022

 

14 April 2021 

Hurricane Energy plc

("Hurricane" or the "Company")

Competent Person's Report on the Lancaster Field & 2022 Production Guidance

Hurricane Energy plc, the UK based oil and gas company, announces that the updated Competent Person's Report ("CPR") on the Company's Lancaster Field by ERC Equipoise Ltd ("ERCE") has been published on the Company's website at: 

https://www.hurricaneenergy.com/assets/reserves-and-resources 

ERCE's work has been prepared in accordance with the June 2018 Petroleum Resources Management System ("PRMS") as the standard for classification and reporting with an effective date of 31 December 2021. 

As shown in the tables below, ERCE have increased the estimated Lancaster Reserves. The 31 December 2021 position is partly due to an improvement in the expected future production and to an increase in the economic life of the field aided by higher oil prices, offset by the increased production during 2021.

2022 Production Guidance 

On 29 September 2021, the Company provided production guidance for the six-month period 1 October 2021 to 31 March 2022 of 8,500 - 10,000 bopd, based on FPSO production uptime assumption of 96.5% and production from the P6 well alone on artificial lift via ESP.  Production during this six-month period was 9,689 bopd, reflecting continued excellent uptime on the FPSO combined with production rates towards the upper end of the range. 

Management's production guidance for the full calendar year 2022 is 7,500 - 8,600 bopd.  This assumes FPSO production planned uptime of 96.5% and production from the P6 well alone on artificial lift via ESP.  Guidance includes the impact of an annual maintenance shutdown, anticipated to occur during Q3 2022. 

Antony Maris, CEO of Hurricane, commented: 

"The efforts of the surface and subsurface teams in beating the mid-case performance target set at the start of the forecast period have been superb. Together with excellent uptime across all elements of the system has allowed the Company to benefit from the higher than expected oil prices and enabled more reserves to be added in the updated CPR. This supports management's production forecast for the years to come.

Going forward we look to maintain the excellent performance of both the well and the FPSO while we also focus on the Company's next steps." 

Lancaster Reserves and Resources 

 ERCE's estimates of Reserves for the Lancaster field as of 31 December 2021 

	Gross			Net attributable to Hurricane
	1P	2P	3P	1P	2P	3P
Developed Reserves (MMbbl)1	4.1	5.8	9.1	4.1	5.8	9.1
NPV10 (US$m)2	40.0	70.8	117.4	40.0	70.8	117.4

Notes: 

1.  In determining the economic Reserves for the Lancaster field, ERCE has assumed a nominal Brent oil price forecasts of US$75/bbl in 2022, US$71/bbl in 2023, US$69/bbl in 2024 and US$70/bbl in 2025. In line with PRMS guidelines, the nominal oil prices assumed are those forecasts made as at the effective date of the CPR, being 31 December 2021. Prices are escalated at 2.0% per annum inflation.

2.  NPV10 equates to the net present value of cash flows from the Lancaster field at a 10% discount rate at the effective date of 31 December 2021

ERCE's estimates of Contingent Resources for the Lancaster field as of 31 December 2021 

	Gross			Net attributable to Hurricane
	1C	2C	3C	1C	2C	3C
Contingent Resources, Development Unclarified (MMbbl)3	11.3	35.4	86.9	11.3	35.4	86.9

3.  Contingent Resources, Development Unclarified, assume additional development wells and / or water injection is implemented as part of any further development; and contingent on regulatory consents, funding and execution during the lifetime of the existing Lancaster wells. 

A summary of the movements in net attributable 2P Reserves as compared to the previous CPR (effective date of 31 December 2020) is as follows: 

	Net attributable 2P Reserves (MMbbl)
At 31 December 2020	7.1
Produced during the year	(3.7)
Change in assumptions and economic life	2.4
At 31 December 2021	5.8

Review by Qualified Person

The technical information in this release has been reviewed by Antony Maris, Chief Executive Officer, who is a qualified person for the purposes of the AIM Guidance Note for Mining, Oil and Gas Companies. Mr Maris is a petroleum engineer with more than 35 years' experience in the oil and gas industry. He has a B.Sc.(Eng.) Petroleum Engineering (Hons) from the Imperial College of Science and Technology (University of London) Royal School of Mines A.R.S.M. and an MBA from Kingston Business School.

Contacts: 

Hurricane Energy plc  Antony Maris, Chief Executive Officer  [e-mail]	[phone]
Stifel Nicolaus Europe Limited   Nominated Adviser & Joint Corporate Broker  Callum Stewart / Jason Grossman	[phone]
Investec Bank plc  Joint Corporate Broker  Chris Sim / Jarrett Silver / Charles Craven	[phone]
Vigo Consulting    Public Relations  Patrick d'Ancona / Ben Simons  [e-mail]	[phone]

About Hurricane 

Hurricane has a 100% interest in and operates the Lancaster field, the UK's first field to produce from a fractured basement reservoir. 

Hurricane also has a 50% interest in the Greater Warwick Area licence, which contains the Lincoln and Warwick assets. 

Visit Hurricane's website at www.hurricaneenergy.com 

Glossary 

bopd	Barrels of oil per day
ESP	Electric submersible pump
FPSO	Floating production storage offloading vessel
MMbbls	Millions of barrels of oil

PRMS Definitions

1C	Denotes low estimate of Contingent Resources.
2C	Denotes best estimate of Contingent Resources.
3C	Denotes high estimate of Contingent Resources.
1P	Denotes low estimate of Reserves (i.e., Proved Reserves). Equal to P1.
2P	Denotes the best estimate of Reserves. The sum of Proved plus Probable Reserves.
3P	Denotes high estimate of reserves. The sum of Proved plus Probable plus Possible Reserves.
Contingent Resources	Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations by application of development projects, but which are not currently considered to be commercially recoverable owing to one or more contingencies.
Contingent Resources, Development Pending	A discovered accumulation where project activities are ongoing to justify commercial development in the foreseeable future.
Contingent Resources, Development Unclarified	A discovered accumulation where project activities are under evaluation and where justification as a commercial development is unknown based on available information.
Developed Reserves	Reserves that are expected to be recovered from existing wells and facilities. Developed Reserves may be further sub-classified as Producing or Non- Producing.
Economic Limit	Defined as the time when the maximum cumulative net cash flow (see Net Entitlement) occurs for a project.
Net Entitlement	That portion of future production (and thus resources) legally accruing to an entity under the terms of the development and production contract or license. Under the terms of PSCs, the producers have an entitlement to a portion of the production. This entitlement, often referred to as "net entitlement" or "net economic interest" is estimated using a formula based on the contract terms incorporating costs and profits.
Reserves	Reserves are those quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions.

Inside Information 

This announcement is released by Hurricane Energy plc and contains inside information under Regulation (EU) 596/2014 on market abuse, as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (the UK MAR). For the purpose of the UK MAR, this announcement is made by Antony Maris, Chief Executive Officer at Hurricane Energy plc.

 

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