Most of the attention on Hurricane Energy Plc (LON:HUR) presently focusses on the group’s financing plans and its anticipated move to take the Lancaster discovery into early production, but, after such a successful 2016 drill programme many investors will likely wondering what else is on the agenda.
It is true that taking Lancaster to production is the primary strategic aim though the flagship field is now just one of Hurricane’s three big confirmed discoveries.
Deep in the West of Shetland oil company’s financial results statement Hurricane detailed its future plans as far as the ‘subsurface’ is concerned.
Hurricane told investors that the immediate plan is to fully evaluate and correlate the Lancaster, Lincoln and Halifax wells – including a detailed petrophysical analysis as well as fracture picking, reservoir modelling, reservoir simulation and further seismic mapping.
This desktop work is expected to feed into the next competent persons report which is being conceived to give a broader indication of the potentially vast resource potential unlocked by the successful recent drilling programme.
The new CPR, which will include estimates for assets not covered by the Lancaster CPR, released on Monday May 8, is scheduled to be complete by late 2017.
Hurricane noted the timing of future drill programmes to appraise and explore assets besides the Lancaster EPS is yet to be confirmed.
Nonetheless, it highlighted that it will be ‘a function of funding and rig operations related to the Lancaster development’.
It added: “well planning will continue with the objective of positioning the Company in an optimum position to take advantage of the rig market.
Two ‘greater’ hydrocarbon areas
It is, at this point, worth noting an important finding of the most recent drill programme – which is that the group’s discoveries and projects can be split into two key areas.
There are described as the Greater Lancaster Area and the Greater Warwick area.
Hurricane’s Greater Lancaster Area (GLA) comprises the Lancaster discovery and the Halifax discovery well which are located some 30 kilometres apart, but, are now believed to be part of the same single oil accumulation.
These discoveries are not, however, believed to be connected to the discovery confirmed in the successful Lincoln well, which is seen to be separated from the GLA by a fault.
Lincoln is though believed to be connected to Warwick, which whilst on the original rig docket was not drilled in the 2016 programme (as Hurricane tested Halifax instead).
Together Lincoln and Warwick are seen as the second large and connected structure, which is being referred to as the Greater Warwick Area (GWA).
Hurricane explained in its results statement that the future well locations will aim to further delineate and confirm the GLA and GWA structures.
The potential new well locations are intended to further delineate the GLA and GWA.
Confirming the GLA would likely bank a multibillion barrel discovery into Hurricane’s resource inventory – aerially the project would cover a similar area as BP’s 8bn barrel Clair field, which is also in the West of Shetland region.
To achieve that confirmation, Hurricane envisages that at least two new wells will be required, and one of them would need to be a horizontal production well.
Indeed, Hurricane does note that at the Halifax location a commercial hydrocarbon flow needs to be demonstrated.
At the GWA, meanwhile, an envisaged two well appraisal programme would aim to confirm Warwick. A horizontal well test would also be needed for the GWA too.
Hurricane explained though that there’s potential for the GWA uncertainties to be addressed with a single well location and a side-track - similar to the last year’s successful programme at Lancaster.
Whilst these potential appraisal and exploration programmes remain secondary to Hurricane delivering the Lancaster EPS, they plainly represent the kind of ‘blue sky’ potential that has thus far captured the attentions of investors.
Hurricane has an awful lot on its plate with Lancaster alone, nonetheless, it appears there remains a great deal of excitement to come once the company can start looking beyond the EPS.