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Hurricane Energy moves closer to production signing up FPSO for Lancaster field

Published: 15:42 28 Nov 2016 GMT

Hurricane Energy drilling offshore, West of Shetland in North Sea
Lancaster is on track to start producing oil in just over two years

Hurricane Energy Plc (LON:HUR) has taken another step towards the initial start-up of the giant Lancaster field in the North Sea’s West of Shetland region.

The AIM quoted company has now signed up a floating production, storage and offloading (FPSO) vessel for the field’s early production system.

It told investors it has signed a heads of terms agreement with Bluewater Energy Services (BES) for the use of the Aoka Mizu FPSO.

"Hurricane is delighted to have entered into an FPSO agreement for the Lancaster EPS,” said Dr Robert Trice, Hurricane chief executive.

“This will allow us to maintain our desired first oil date of H1 2019 and further demonstrate the potential of fractured basement reservoirs in the UK.”

Hurricane, according to the agreement, will have an exclusive right to enter into a fully-termed agreement to take Aoka Mizu for the early production system and potentially for up to ten years.

The agreement sets out commercial terms, including details such as the costs and terms of upgrades as well as charter rates for the life of the contract.

It means Hurricane is closer to taking Lancaster to project sanctioning, with the key milestone anticipated in mid-2017. In the meantime Hurricane and BES have now commenced a new front-end engineering design study, due for the early part of the second quarter.

Trice added: “We are grateful to BES both for the strong commitment they have shown to the Lancaster project and for their innovative approach to working with Hurricane.

“We have a strong strategic and commercial alignment and this collaborative approach is already reflected throughout all aspects of the ongoing technical work on the project.

“As our current drilling campaign continues to assess the full regional potential of our acreage, this agreement is another important milestone in our efforts to move Lancaster towards production, creating value for our shareholders and for the UK."

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