AGM Statement

Released : 10/06/2015 11:00

RNS Number : 6933P
Hurricane Energy PLC
10 June 2015
 

 

Embargoed: 11.00am, 10 June 2015

Hurricane Energy plc

("Hurricane" or the "Company")

AGM Update

Hurricane Energy plc (AIM: HUR), the UK-based oil and gas company focused on hydrocarbon resources in naturally fractured basement reservoirs, will provide the following update regarding its Lancaster discovery, West of Shetland, at the Annual General Meeting of the Company ("AGM") being held at 11.00am today. The presentation which will be given at the AGM is available for viewing on the Company's website at www.hurricaneenergy.com.

Hurricane has made significant progress in its technical work on its Lancaster asset since drilling a successful well in the summer of 2014. Production rates of 9,800 bopd with ESP (electric submersible pump) support and 5,300 bopd under natural flowing conditions were recorded during the well test, with both production rates being constrained by the limited capacity of surface equipment. No formation water was produced and the recorded pressure and flow information provided unambiguous evidence to support the Company's earlier opinions that the Lancaster reservoir comprises a very well connected fracture system capable of producing oil at commercial rates.

Since completing the well the Company has been working with Schlumberger to develop a state-of-the-art full field simulation model of the reservoir, which marks a step change in the Company's understanding of the field. Hurricane continues to work with Schlumberger with the objective of optimising the simulation model to plan a refined development strategy for the field.

A key conclusion from the analysis of the 1 km horizontal well drilled last year, coupled with Hurricane's internal field development work, is that the Lancaster reservoir can support a commercially attractive phased development, commencing with an Early Production System (EPS), at oil prices below current levels.

The Company is now planning for a higher productivity reservoir, fewer wells for field development and lower initial capex ahead of first oil. This phased development concept including the EPS solution has been presented to potential farminees as part of the ongoing farm-out discussions. Hurricane is pleased to confirm that it has seen significant levels of industry interest in the data room and continues to do so.

As a 100% owner of Lancaster, the Company is considering its options with regards to the required funding for its field development plans - which may or may not include a farm-out - from a position of strength.  

As a consequence of the ongoing technical work and farm-out negotiations, Hurricane's management believes it is in the best interests of the Company to defer the commissioning of a revised Competent Person's Report until Hurricane is able to include a definitive plan for a Full Field Development of the Lancaster reservoir whilst including the results of the recent horizontal well. This will increase the value and relevance of the CPR to the Company in general and the Lancaster asset in particular.

John Hogan, Chairman, commented:

"It is very encouraging that we have a development plan for Lancaster that is economically robust at oil prices below those currently prevailing and I therefore expect this will be an attractive project to industry partners.

During commercially sensitive farm-out discussions a lack of news-flow can understandably be frustrating for shareholders, but the Company must act in their best interests by not compromising ongoing negotiations by making public statements before a definitive conclusion has been reached. We are confident that these discussions, coupled with the excellent technical progress we have made on Lancaster with our recent work, will provide the foundation for significant value creation for our shareholders and I am looking forward to updating the market further in due course."

-Ends-

Contact Details:

Hurricane Energy plc

Dr Robert Trice

Chief Executive Officer

+44 1483 862 820

comms@hurricaneenergy.com

 

www.hurricaneenergy.com

Cenkos Securities plc

Derrick Lee

Nick Tulloch

+44 131 220 6939

+44 131 220 9772

dlee@cenkos.com

ntulloch@cenkos.com

Vigo Communications

Patrick D'Ancona

Ben Simons

+44 207 7016 9573

+44 207 7016 9570

patrick.dancona@vigocomms.com

ben.simons@vigocomms.com


Notes for Editors:

Hurricane is an oil and gas company focused on hydrocarbon resources in naturally fractured basement reservoirs. The Company's focus is to discover, appraise and develop oil reserves in basement rock and has successfully found oil on the UKCS. The Company has 444-470 Mmboe of 2C Contingent Resources and 432-442 Mmboe P50 Prospective Resources on acreage it controls 100% under licences P1368, P1485, P1835 and P1884.

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. 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 access a material new 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.

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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