For immediate issue: Wednesday 16 April, 2014
Hurricane Energy plc
("Hurricane" or the "Company")
Hurricane Energy mobilises Sedco 712 Rig
Hurricane Energy plc, the UK-based oil and gas company focused on hydrocarbon resources in naturally fractured basement reservoirs, is pleased to announce that it has commenced the mobilisation process for the Transocean Sedco 712 semi-submersible drilling rig.
The planned operation is to drill and test the Lancaster basement oil discovery. Well management company SPD Limited has been contracted to provide well construction and project management services during the drilling campaign.
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.
Dr Robert Trice, Chief Executive Officer of Hurricane, commented:
"The team has worked hard to ensure we are fully prepared for this mobilisation and we are ready to take advantage of the early drilling season on this important appraisal well. I am pleased that mobilisation is starting at the earliest date possible in our expected range."
A further announcement will be made in due course.
Hurricane Energy plc
Chief Administrative Officer
+44 1483 862 820
Cenkos Securities plc
+44 131 220 6939
+44 20 7016 9573
+44 20 7016 9574
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 in Godalming, Surrey and has office facilities in Aberdeen. The history of the Group is set out below:
2005 Formed a 50:50 joint venture partnership with Sunshine Oil plc. The joint venture applied for nine blocks West of Shetland in the 23rd Offshore Oil and Gas Licensing Round and was awarded operatorship of these blocks under frontier licence P1368.
2006 Drilled a dry well (Wellington sandstone prospect) fulfilling the work commitment on P1368 and securing the licence on the Lancaster, Whirlwind and Lincoln basement prospects.
2007 Awarded five licence blocks under the 24th Offshore Oil and Gas Licensing Round. Hurricane obtained ISO 14001 Environmental Management System accreditation.
2008 Hurricane raised approximately £43 million via an equity fundraising and acquired joint venture partner Sunshine Oil plc (now Hurricane Exploration (UK) Limited). Awarded two licences (PEDL 160 and PEDL 229) in the 13th Onshore Oil and Gas Licensing Round.
2009 Drilled successful Lancaster well under frontier licence P1368 and discovered light oil in fractured basement.
2010 Successful equity fundraising of £60 million to fund Lancaster and Whirlwind drilling. Awarded block 204/23c under traditional licence P1835 in 26th Offshore Oil and Gas Licencing Round. Hurricane undertook drilling and testing of the Lancaster sidetrack well which flowed at approximately 2,500 bopd (the well was suspended for future operations). Hurricane drilled the Whirlwind basement prospect and suspended the well for subsequent testing.
2011 Hurricane raised approximately £20 million through an equity fundraising. Relinquished its onshore licences. Hurricane re-entered Whirlwind for testing and successfully brought light oil and gas to the surface confirming a volatile oil or gas condensate discovery (the well was suspended for future operations).
2012 Raised approximately £28 million through an equity fundraising. Awarded 10 blocks West of Shetland under frontier licence P1884 in the 26th Offshore Oil and Gas Licensing Round.
2013 Completed a fundraising of approximately £31 million (through the issue of Convertible Loan Notes and new equity together with a Warrant to subscribe for equity) including a material contribution by BP. Changed name to Hurricane Energy plc. Entered into a rig contract to drill Lancaster appraisal well in 2013 but subsequently withdrew from the rig contract due to delayed availability of the rig. 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.
2014 Entered into the Assignment Agreement to obtain the use of a rig to drill the Lancaster appraisal well in 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.