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Hurricane Energy CFO confident over financing Lancaster oil field

Last updated: 06:58 24 Oct 2016 BST, First published: 13:52 21 Oct 2016 BST

Drilling at the Lancaster well
Drilling success is driving Hurricane and Lancaster forward

Hurricane Energy Plc (LON:HUR) finance chief Alistair Stobie is confident of getting a good deal on project financing for the Lancaster oil field in the North Sea.

Stobie has banked £120mln in less than six months in two successful share placings. Priced at 15p, in May, the first marked a 50% premium while the most recent lifted the bar to 34p per share.

Operationally it has been a very active few months, and with the new funds sparking a further two-well programme there’ll be no let-up in the schedule.

Nonetheless the breakthrough success of two wells drilled to date attentions are naturally turning to the development planning for Lancaster, where a project sanction decision targeted for the second half of 2017.

Stobie, in an interview with Proactive Investors, emphasised that the group is now in a stronger position to move the project forward.

“It is still not an easy environment to raise development financing, and there are a number of companies still struggling with what they managed to put together in a different price environment.

“But, I think the market is beginning to turn. US$50 oil feels as though it is a little bit firmer, and people are now looking to the future rather than the past.

“We are relatively confident that we’ll get the [project] funding away at prices that are advantageous to our shareholders.”

Like many aspirational oilers Hurricane has looked for industry partnerships, farm-out deals to bring in larger developers, but, unlike its peers the company won’t be forced into a drawn out waiting game.

Stobie says the intention is still to open a data room process to allow a possible farm-out partners to look closer at the project’s technical details. He adds that conversations have taken place with companies that had previously ‘close to the company’ before Hurricane suspended the process back in June.

“The benefit we’re now in is that previously we had to wait for the farm-out in order to move forward,” he added.

“[Now] we will be able to move forward, and we hope we can move forward with industry partners, but if we have to go it alone we will go it alone.”

It is this front-foot mentality that is currently driving both Hurricane and the Lancaster field rapidly towards project sanctioning.

“The newsflow going from here is extraordinary,” Stobie explained.

He details that the Lincoln exploration well will spud in early November. This well will target a 250mln barrel prospect, and it will take between 45 to 60 days to drill.

After that Hurricane will drill Warwick, another prospect similar to Lancaster, or another target in the vicinity of the Rona Ridge area that hosts Lancaster (an area that’s now being referred to by the company as the Greater Lancaster Area).

Stobie also revealed that the company aims to secure a floating production storage and offloading (FPSO) vessel before the end of the year, and he expects a new competent persons report (CPR) will be produced in the first quarter of next year.

“…and that’s probably enough for a small company like Hurricane to do be getting on with!”

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