Hurricane Energy spuds Lancaster well

RNS Number : 6060F

Hurricane Energy PLC

28 April 2014

 

Embargoed: 07:00hrs 28 April 2014

Hurricane Energy plc

(the "Company")

Hurricane Energy spuds Lancaster well

Hurricane Energy plc, the UK-based oil and gas company focused on hydrocarbon resources in naturally fractured basement reservoirs, is pleased to announce that the Lancaster horizontal appraisal well was spudded at 10:30hrs BST on 26 April 2014.

The Company is using the Transocean Sedco 712 semi-submersible drilling rig for the operation which is intended to drill and test the Lancaster basement oil discovery. The operation is expected to last approximately 75 days after which further technical analysis will be undertaken.

A further announcement will be issued in due course.

-Ends-

Contact Details:

Hurricane Energy plc	Keith Kirby, Chief Administrative Officer	[phone]	[e-mail] www.hurricaneenergy.com
Cenkos Securities plc	Derrick Lee Beth McKiernan	[phone]	[e-mail] [e-mail]
Media enquiries: Vigo Communications	Patrick d'Ancona Ben Simons	[phone] [phone]	[e-mail] [e-mail]

Notes for Editors:

Hurricane is an oil and gas company focused on hydrocarbon resources in naturally fractured basement reservoirs. The Company intends to discover, appraise and develop oil reserves in basement rock and has successfully found oil on the UKCS. The Company has circa 450 MMboe of 2C Contingent Resources and 440 MMboe P50 Prospective Resources on acreage it controls 100% under licences P1368, P1485, P1835 and P1884.

Hurricane was founded in 2004 by Dr Robert Trice, alongside a private investor, in the belief that fractured basement reservoirs represent a significant untapped resource. The Company is headquartered near Godalming, Surrey and has office facilities in Aberdeen.

The Lancaster discovery was made in 2009 and further tested in 2010. Hurricane's Competent Person's Report, prepared by RPS Energy Consultants Limited in November 2013, allocates 2C recoverable Contingent Resources of 207 MMboe to Lancaster. The discovery is located across blocks 205/21a, 205/22a and 205/26b West of Shetland on Frontier Licence P1368. All assets under the licence are controlled 100% by Hurricane.

In 2013 the Group raised £31.4 million (through the issue of Convertible Loan Notes and new equity together with a Warrant to subscribe for equity) and also changed name to Hurricane Energy plc. The Group entered into a rig contract to drill the Lancaster appraisal well in 2013 but subsequently accepted cancellation of the rig contract due to delayed availability of the rig. Hurricane relinquished offshore frontier licence P1884 and extended the third term of frontier licence P1368 to 21 December 2019. The Company extended the term for licence P1485 (Typhoon) to 31 December 2014.

In early 2014 the Group entered into the Assignment Agreement to obtain the use of the Transocean Sedco 712 drilling rig to drill and test the Lancaster appraisal well in 2014. The Group completed an IPO on the AIM market on 4 February 2014.

Strategy and Focus

The Group's primary objective is to increase shareholder value through the exploration, appraisal and development of fractured basement reservoirs. The Directors' strategy to achieve this is as follows:

1)            Concentrate on basement in proven petroleum systems

To date, the Group's basement exploration approach has been to focus on areas where oil had been found in basement structures by previous operators but not progressed on the basis that the prevailing opinion at the time was that such discoveries were not commercial. Once such potential areas have been identified, the Group undertakes a high grading process involving the evaluation of existing geotechnical data to establish if, and where, suitable prospects may be present.

The Directors believe this approach serves to reduce exploration risk on basement prospects by ensuring a working hydrocarbon system is present and by having available a comprehensive geotechnical database (both seismic and well data).

2)            Regional focus on West of Shetland

Hurricane has established an attractive portfolio of exploration and appraisal projects, focused on fractured basement prospectivity West of Shetland. DECC believes that the West of Shetland/Atlantic margin contains the most significant remaining UK resources yet to be discovered, at approximately 7.9 billion boe. This prospectivity has led to the significant interest generated by the 27th Offshore Oil & Gas Licencing Round. The Directors believe that the potential scale of the recoverable resource within these fractured basement reservoirs presents the UK oil and gas industry with a significant opportunity to secure a material strategic asset.

3)            Ownership and operatorship during exploration and early stage appraisal

Hurricane has maintained 100% ownership and operatorship of all of its assets to date. The Directors believe that this puts the Company in a strong position to invite other industry participants to participate in the assets and share costs, in preparation for field development that will lead to producing assets.

4)            Maintain an influential equity position

As Hurricane progresses the Group's assets towards development it intends to seek potential partners through a farm-out or other process to assist in future development and implementation of the FDP whilst maintaining an influential equity position.

5)            Opportunities to acquire exploration licences in existing and new regions

Hurricane intends to participate in applications for new licence areas where the Group will be able to apply its technical expertise in basement reservoir evaluation to create value for its Shareholders. The Directors believe that the Group's skill set and its track record to date leave it well positioned to secure further licences in countries with low geopolitical risk.

 

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