Proactiveinvestors United Kingdom Hurricane Energy PLC https://www.proactiveinvestors.co.uk Proactiveinvestors United Kingdom Hurricane Energy PLC RSS feed en Sat, 20 Jul 2019 02:52:51 +0100 http://blogs.law.harvard.edu/tech/rss Genera CMS action@proactiveinvestors.com (Proactiveinvestors) action@proactiveinvestors.com (Proactiveinvestors) <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190717155044_14153478/ Wed, 17 Jul 2019 15:50:44 +0100 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190717155044_14153478/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190717090148_14152679/ Wed, 17 Jul 2019 09:01:48 +0100 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190717090148_14152679/ <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190716070008_14150330/ Tue, 16 Jul 2019 07:00:08 +0100 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190716070008_14150330/ <![CDATA[News - Hurricane spuds Lincoln Crestal well off the west coast of the Shetland Islands ]]> https://www.proactiveinvestors.co.uk/companies/news/223820/hurricane-spuds-lincoln-crestal-well-off-the-west-coast-of-the-shetland-islands-223820.html Hurricane Energy PLC (LON:HUR) has spudded the Lincoln Crestal well in the Greater Warwick Area, which lies about 100km off the west coast of the Shetland Islands.

The well was spudded – the start of the drilling process – using the Transocean Leader rig, which recently completed work to plug and abandon the Warwick Deep well.

Lincoln Crestal is the second in a three-well programme designed to further test Hurricane’s assets in the Greater Warwick Area, in which Hurricane has a 50% interest following Spirit Energy’s farm-in last September.

Earlier this month, chief executive Robert Trice said this well is now the “preferred candidate” to tie back to the Aoka Mizu floating production storage and offloading vessel, which is stationed in the Lancaster field.

READ: Hurricane jumps as it plays down impact of Warwick Deep disappointment

News of the spudding comes a day after the £1.1bn company upped its production guidance slightly for 2020.

The company had always targeted 17,000 barrels of oil per day (bopd) from next year, but “based on the many positive indications seen to date”, there is the potential for production to head up towards 20,000 bopd.

Bosses also reassured investors that the recent disappointment of the Warwick Deep well has no impact on its other assets nearby.

“We have evidence that suggests to Hurricane that the result at Warwick Deep does not have negative read-across to Lancaster or Lincoln,” Hurricane said on Thursday.

Shares were up again on Friday morning, climbing 3.3% to 55.4p.

]]>
Fri, 12 Jul 2019 10:55:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/223820/hurricane-spuds-lincoln-crestal-well-off-the-west-coast-of-the-shetland-islands-223820.html
<![CDATA[RNS press release - 'Lincoln Crestal' 205/26b-B Well Spud ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190712100925_14146705/ Fri, 12 Jul 2019 10:09:25 +0100 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190712100925_14146705/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190712070004_14145936/ Fri, 12 Jul 2019 07:00:04 +0100 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190712070004_14145936/ <![CDATA[News - Hurricane Energy shares jump as explorer plays down impact of Warwick Deep disappointment ]]> https://www.proactiveinvestors.co.uk/companies/news/223746/hurricane-energy-shares-jump-as-explorer-plays-down-impact-of-warwick-deep-disappointment-223746.html Hurricane Energy PLC (LON:HUR) shares flowed higher on Thursday after the explorer reassured investors that the recent disappointment of the Warwick Deep well doesn’t impact the nearby Lancaster field.

Earlier this month, Hurricane bosses decided to plug and abandon the Warwick Deep well after it failed to flow at commercial rates, despite initial encouraging signs.

READ: Hurricane Energy to move onto Lincoln Crestal well after Warwick Deep disappointment

The news spooked the market, with analysts fearing there might be a negative read-across to Lancaster, given that Warwick was testing the same fractured basement reservoir interval.

But Hurricane has today reassured investors that the Warwick Deep disappointment doesn’t mean anything for Lancaster.

“We are encouraged by the Warwick Deep well, despite the penetrated fracture system not supporting a commercial oil flow rate,” said chief executive Robert Trice.

“Hurricane's assessment of data acquired during drilling and testing indicates that the well encountered a significant oil column on the Warwick structure. Our initial analysis indicates an OWC consistent with pre-drill predictions. Confirmation of our provisional analysis will require data from the remaining 2019 drilling campaign, as well as fluid sample analysis from Warwick Deep.

He added: “Importantly, we have evidence that suggests to Hurricane that the result at Warwick Deep does not have negative read-across to Lancaster or Lincoln.”

2020 production guidance lifted

Looking forward, the drill rig has now finished the work to plug and abandon the Warwick Deep well and has now moved on to the Lincoln Crestal well – the second well of a three-well programme on the Greater Warwick Area.

Even further down the line, Hurricane has upped its 2020 production guidance for the early production system at Lancaster.

The company had always targeted 17,000 barrels of oil per day (bopd) from next year, but “based on the many positive indications seen to date”, there is the potential for production to head up towards 20,000 bopd.

Shares were up 17.7% to 52.3p on Thursday afternoon.

--Updates share price--

]]>
Thu, 11 Jul 2019 11:20:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/223746/hurricane-energy-shares-jump-as-explorer-plays-down-impact-of-warwick-deep-disappointment-223746.html
<![CDATA[RNS press release - Operational Update: Capital Markets Day ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190711100001_14144979/ Thu, 11 Jul 2019 10:00:01 +0100 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190711100001_14144979/ <![CDATA[News - Hurricane Energy to move onto Lincoln Crestal well after Warwick Deep disappointment ]]> https://www.proactiveinvestors.co.uk/companies/news/223106/hurricane-energy-to-move-onto-lincoln-crestal-well-after-warwick-deep-disappointment-223106.html Hurricane Energy PLC (LON:HUR) is to move onto the next well in its drill programme after deciding to plug and abandon the Warwick Deep well, located off the west coast of the Shetland Islands.

The well was drilled to almost 2km below the sea floor, and despite initial encouraging signs, it did not flow at commercial rates, instead producing a mixture of drilling brine, water, oil and gas.

The drill rig will now be moved to the Lincoln Crestal well – the second well of a three-well programme on the Greater Warwick Area, in which Hurricane has a 50% interest following Spirit Energy’s farm-in last September.

READ: Hurricane generates first revenues

“It is disappointing that the Warwick Deep well did not flow at commercial rates,” said chief executive Robert Trice.

“We were initially encouraged by hydrocarbon shows and gas ratio analysis indicative of light oil, however drill stem testing has clearly demonstrated that Warwick Deep cannot be considered suitable as a future production well and therefore the well will be plugged and abandoned.”

He added: “I look forward to commencing operations on the second well in the three-well programme, Lincoln Crestal. This is now the preferred candidate to be tied back to the Aoka Mizu FPSO, where Lancaster EPS production operations remain in-line with guidance.”

Analysts at SP Angel took encouragement from the Lancaster testing update, although they conceded that the Warwick Deep result was "disaapointing".

Peel Hunt was a bit more downbeat, stating: "Given Warwick Deep tests the same fractured basement reservoir interval as the Lancaster field (separated by the Brynhild fault zone), we see negative read across to reservoir quality risk in the Lancaster field."

Hurricane shares were down 18.3% to 42.9p in early-afternoon trading on Monday.

--Adds analyst comment and share price--

]]>
Mon, 01 Jul 2019 08:00:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/223106/hurricane-energy-to-move-onto-lincoln-crestal-well-after-warwick-deep-disappointment-223106.html
<![CDATA[RNS press release - 'Warwick Deep' 205/26b-13Z Well Update ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190701070008_14130294/ Mon, 01 Jul 2019 07:00:08 +0100 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190701070008_14130294/ <![CDATA[News - Hurricane Energy generates first revenues ]]> https://www.proactiveinvestors.co.uk/companies/news/222302/hurricane-energy-generates-first-revenues-222302.html Hurricane Energy PLC (LON:HUR) has generated its first-ever revenues after selling a tanker-load of oil from the Lancaster field, which sits about 100km off the west coast of the Shetland Islands.

An FPSO (floating production storage and offloading) vessel – called the Aoka Mizu – has been stationed above Lancaster since March, and Hurricane reported earlier this month that it had achieved ‘first oil’ at the project following the commencement of the Early Production System (EPS).

READ: Hurricane achieves 'first oil' at Lancaster EPS

The Amundsen Spirit shuttle tanker has now lifted that oil from the Aoka Mizu and is taking it back to Rotterdam, where it will be refined and sold on by its new owner.

BP Oil International marketed the cargo, as per the terms of the offtake agreement.

“First lifting from the Lancaster EPS marks the generation of Hurricane's first revenue,” said chief executive Robert Trice.

“We are now building the cash flow necessary to invest in the further appraisal and development of Hurricane's basement assets.”

Early production system ramping up

The oil has been produced from EPS development at Lancaster, which, as well as giving Hurricane a small cash flow, is primarily in place to give bosses longer-term data to help them better understand the project.

In the initial phase of the EPS, the company intends to gradually ramp up facilities over a six-month period.

The plan is for the EPS to produce around 9,000 barrels of oil per day (bopd) for the first three months before increasing that to 13,000 bopd in the next three-month period.

After that, Hurricane expects to be producing nearer to 17,000 bopd, which is about 85% of total capacity and the long-held target for the EPS.

Management reckon they need a year’s worth of production data in order for them to have a “clear view of the reservoir” and how best to develop it.

In early afternoon trading, shares in Hurricane Energy were 1% lower at 55.15p, with investors focused on the company's next move.

 -- Adds share price -- 

]]>
Tue, 18 Jun 2019 07:50:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/222302/hurricane-energy-generates-first-revenues-222302.html
<![CDATA[RNS press release - Operational Update ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190618070006_14114085/ Tue, 18 Jun 2019 07:00:06 +0100 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190618070006_14114085/ <![CDATA[RNS press release - Results of AGM ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190605150058_14100053/ Wed, 05 Jun 2019 15:00:58 +0100 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190605150058_14100053/ <![CDATA[News - Hurricane Energy has reached a very significant milestone at Lancaster field, but exploration results key ]]> https://www.proactiveinvestors.co.uk/companies/news/221562/hurricane-energy-has-reached-a-very-significant-milestone-at-lancaster-field-but-exploration-results-key-221562.html Hurricane Energy PLC's (LON:HUR) share price decline on Wednesday underplayed a very significant milestone for the group as it delivered ‘first oil’ from the early production system (EPS) at the Lancaster field in the West of Shetland region in the North Sea.

The hotly anticipated achievement comes on schedule, bringing imminent revenue and cash flows. Trading at 58.95p, Hurricane shares were subdued, however.

Starting the EPS at Lancaster marks a crucial de-risking step towards unlocking Rona Ridge, a possible multi-billion barrel development project in the future.

The EPS addresses only a small fraction of Lancaster’s overall discovered resource. It is hoped that longer term production data will yield important validation and confidence ahead of much more substantial investment decisions.

Exploration is always a key driver

Part of the reason for the muted response in the stock exchange is that this particular achievement was well communicated, well understood by the market and came in pretty much on schedule (once a few minor teething issues were resolved).

It is worth noting that the EPS start-up has long been priced into the Hurricane share price, which presently values the group at around £1.25bn in London.

The start-up delivers on promises made by Hurricane following the company’s last successful phase of drilling.

New drilling is, meanwhile, underway right now. And, as is typical with most growth stocks, the more speculative segment of investors and traders are more keenly interested in the exploration operation than the less binary but essential business of engineering and project delivery.

It is, at present, more likely that Hurricane’s share price will be moved by the outcome of new wells not the tangible steps that have brought it to the cusp of revenue-generating production.

Production ramp up at Lancaster

Hurricane on Wednesday revealed that the EPS opening started with a 72-hour test in which two wells flowed at a combined production rate of 20,000 barrels of oil per day (bopd).

In the initial phase of the EPS, the company intends to gradually ramp up facilities over a six month period.

Hurricane anticipates that it will run at around 45% capacity in the first three months before increasing to 65%. The production rate is expected to average between 9,000 to 13,000 bopd during this period.

By the end of the six month period, Hurricane expects the EPS to be running at 85% of capacity.

Hurricane has consistently guided that the EPS would produce at a rate of 17,000 bopd, though it may be notable that the peak rate in the pre-production test measured 20,000 bopd.

Chief executive Dr Robert Trice said, in a statement: "I am delighted to announce that first oil has been achieved and that the Lancaster field is now on production, beginning the phased development of Hurricane's considerable resources on the Rona Ridge.”

City impressed with the expected success

Russ Mould, investment director at AJ Bell, described it as a “massive breakthrough” for Hurricane and the UK oil and gas sector in general.

“The company has achieved first oil from its Lancaster field and this is also the first time crude has been produced from so-called fractured basement reservoirs in the UK,” Mould said in a note.

He added: “The Lancaster field was discovered as far back as 2014 so it has taken some time to reach this point, testament to the challenges in producing oil from such a remote location to the west of the Shetland Islands. The company has employed a floating production vessel to get the job done.

“Hurricane deserves credit for doing so on time and on budget and the market will be eager to hear more about its future plans at a capital markets day in July.”

Elsewhere, oil companies expert Malcolm Graham Wood said the day "some people thought might never happen has arrived”.

He expanded: “Whilst this is clearly a red letter day for Hurricane, it’s whole team led by Dr Trice deserve praise for delivering the first phase on time and within budget I know that no one at the company will be resting on their laurels.

“As has been said consistently throughout this whole process up to 12 months of stable production will be required in order to provide a clear view of the reservoir and ‘enable us to plan for associated full field development scenarios ‘.

“Having said this the fact that at today’s AGM Dr Trice will be able to formally deliver the good news will be a moment of considerable triumph And pride and whilst it is too early to see off the industry nay sayers it is no doubt an opportunity to break out the cigars.”

Exploration well results imminent

Hurricane in mid-April announced the spudding of the Warwick Deep exploration well, the first to be drilled in its partnership with Centrica Plc (LON:CNA) backed Spirit Energy.

It is the first of three planned wells in the programme, which will assess the Greater Warwick Area (GWA), comprising the Lincoln discovery and the previously untested Warwick prospect.

The GWA is believed to be a continuation of the large oil reservoirs seen at the Lancaster field, though the two areas are separated by a fault.

Hurricane retains a 50% stake in the GWA following its farm-out deal to Spirit, which committed to fund and execute the drilling campaign. In all, Spirit is to cover Hurricane’s costs in the GWA, up to US$387mln across five potential phases of work.

The proven Lincoln discovery was estimated to host some 604mln barrels of contingent resources, while Warwick’s prospective resource was pitched at 935mln barrels.

Clearly, a success in the Warwick Deep well could represent a significant upgrade to the GWA project whilst the overall three-well programme aims to bring it towards an initial development scenario.

A further three appraisal/development wells are slated for a follow-up programme in 2020 – which could, subject to results, see ‘first oil’ from the GWA either late next year or early 2021.

Beyond Lancaster’s production growth and future development, these drilling projects represent key value creation drivers for Hurricane.

Whilst the market may not have had much of a reaction to ‘first oil’ from the Lancaster EPS plainly there remains plenty of potential left for investors to shoot for.

]]>
Wed, 05 Jun 2019 13:42:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/221562/hurricane-energy-has-reached-a-very-significant-milestone-at-lancaster-field-but-exploration-results-key-221562.html
<![CDATA[RNS press release - Publication of AGM Presentation ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190605110002_14099545/ Wed, 05 Jun 2019 11:00:02 +0100 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190605110002_14099545/ <![CDATA[News - Hurricane Energy achieves ‘first oil’ at Lancaster field Early Production System ]]> https://www.proactiveinvestors.co.uk/companies/news/221525/hurricane-energy-achieves-first-oil-at-lancaster-field-early-production-system-221525.html Hurricane Energy Plc (LON:HUR) has now achieved ‘first oil’ at the Lancaster oil field, as the start-up programme began with a phase of production testing.

The opening of the Early Production System (EPS) began with a 72-hour test in which a production rate of 20,000 barrels of oil per day (bopd) was achieved.

In the actual start of the EPS the company intends to gradually ramp up facilities over a six month period.

READ: What do investors want from companies such as Hurricane Energy?

Initially, Hurricane anticipates facilities availability of 45% in the first three months before increasing to 65%. The production rate is expected to average between 9,000 to 13,000 bopd during this phase.

By the end of the six month period Hurricane expects the EPS to be running at 85%.

"I am delighted to announce that first oil has been achieved and that the Lancaster field is now on production, beginning the phased development of Hurricane's considerable resources on the Rona Ridge,” said Dr Robert Trice, Hurricane chief executive.

"Lancaster is the UK's first producing fractured basement field and the fact that Hurricane has delivered this industry milestone on time and within budget is an incredible achievement.”

Trice added: "We have successfully achieved our start-up data acquisition objectives and commenced the evaluation of this material.

“Up to 12 months of stable production will be required in order to provide a clear view of the reservoir and enable us to plan for associated full field development scenarios."

]]>
Wed, 05 Jun 2019 07:23:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/221525/hurricane-energy-achieves-first-oil-at-lancaster-field-early-production-system-221525.html
<![CDATA[RNS press release - Operational Update ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190605070008_14098738/ Wed, 05 Jun 2019 07:00:08 +0100 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190605070008_14098738/ <![CDATA[News - Hurricane Energy begins start-up of Lancaster field EPS as Aoka Mizu takes on hydrocarbons ]]> https://www.proactiveinvestors.co.uk/companies/news/220099/hurricane-energy-begins-start-up-of-lancaster-field-eps-as-aoka-mizu-takes-on-hydrocarbons-220099.html Hurricane Energy Plc (LON:HUR) has confirmed a key milestone towards the delivery of the Lancaster field early production system (EPS), with the Aoka Mizu vessel taking on hydrocarbons.

The company, in a statement, told investors that the hydrocarbons were introduced into the Aoka Mizu FPSO (floating production storage and offloading) system on 11 May.

In doing so it marks the end of the commissioning phase and triggers the beginning of the Lancaster EPS start-up.

READ: Centrica’s Spirit kicks off Warwick drill campaign

Next, Hurricane will open up each of the two EPS production wells. Each will be individually tested and then shut-in, allowing data to be gathered, and the process will conclude once the company has initiated continuous flow from both wells for 72 consecutive hours.

After this point Hurricane will declare ‘first oil’ has been achieved at the Lancaster EPS area.

The EPS will yield some 17,000 barrels of oil per, though it is still only a relatively small pilot area in what is otherwise a very large multibillion barrel oil project.

It will deliver important and valuable cash flows to Hurricane and help de-risk the wider development project. Significantly, the EPS will provide longer term production data, which will help inform the larger development in the future.

At the same time as the EPS is starting up, Hurricane is also set for exploration catalysts with a new well programme underway at the neighbouring, 50% owned, Greater Warwick project area.

There, Hurricane is partnered with Centrica-backed Spirit Energy, which is paying for the exploration work as part of its US$387mln ‘farm-in’ package.

]]>
Mon, 13 May 2019 07:24:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/220099/hurricane-energy-begins-start-up-of-lancaster-field-eps-as-aoka-mizu-takes-on-hydrocarbons-220099.html
<![CDATA[RNS press release - Operational Update ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190513070103_14070751/ Mon, 13 May 2019 07:01:03 +0100 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190513070103_14070751/ <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190513070008_14070704/ Mon, 13 May 2019 07:00:08 +0100 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190513070008_14070704/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190509154652_14068708/ Thu, 09 May 2019 15:46:52 +0100 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190509154652_14068708/ <![CDATA[RNS press release - Completion of Block Listing & Block Listing Return ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190509154418_14068704/ Thu, 09 May 2019 15:44:18 +0100 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190509154418_14068704/ <![CDATA[RNS press release - Availability of Annual Report and Notice of AGM ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190425070009_14051039/ Thu, 25 Apr 2019 07:00:09 +0100 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190425070009_14051039/ <![CDATA[News - What do investors want from companies such as Hurricane Energy? ]]> https://www.proactiveinvestors.co.uk/companies/news/218771/what-do-investors-want-from-companies-such-as-hurricane-energy-218771.html Parallel work programmes underway across Hurricane Energy PLC’s (LON:HUR) offshore UK projects present a question that may often roll around the heads of oil executives - what does the market actually want?

More specifically, what do London’s oil and gas ‘investors’ really want – a big bang explorer, or, the slower growth that comes with building a tangible oil production business?

Hurricane is right now in the enviable position of running two very significant programmes, both with major value catalysts.

In the coming weeks and months, Hurricane will deliver ‘first oil’ from the Lancaster field’s Early Production System (EPS).

READ: Hurricane Energy: Centrica’s Spirit kicks off Warwick drill campaign

Instantly, it will cement Hurricane’s position as a meaningful ‘producer’ in the North Sea and UK continental shelf sector, creating some US$200mln of annual cash flow and, importantly, starting a vital phase of data capture.

Over the same period, a Transocean drilling rig will be putting down three potentially high impact wells in the neighbouring Greater Warwick Area (GWA) – the aim is to bulk up the project’s resources, to confirm over a billion barrels of crude, before moving that project into a development scenario.

Hurricane won’t need to spend anything on the GWA wells, thanks to a 2018 farm-out deal with Spirit Energy (69% owned by Centrica PLC) – which is covering up to US$387mln of Hurricane’s total project costs in return for 50% of the assets.

With two very different field programmes underway, plainly this is a busy time for Hurricane.

The Lancaster and GWA programmes will mean quite different things to the different types of ‘investors’ that commit funds to this kind of company. 

Punters love a hole in the ground

Delivering an oil or gas field (and then delivering the product to the marketplace) is an intensely technical and complicated business. 

Often such projects involve large scale engineering and infrastructure development.

There’s a reason such projects tend to cost hundreds of millions, if not billions, of dollars to executive them.

Expense and expertise aside, such projects also take a long time – and a lot of that time passes with little or no corporate commentary. 

Perhaps it is understandable that for some investors, such ventures tend to be a little bit out of sight, out of mind.

Exploration is, in a sense, comparatively quite simple for the lay investor to understand and, once drilling is committed to, the results are more immediate.

Put in perhaps overly simple terms, once drilling is scheduled, investors know the company is going to drill a hole in the ground and at some point shortly thereafter, the company will find out whether there are any hydrocarbons in the hole and whether that discovery has any commercial value.

It is a (comparatively) quick, binary outcome that is usually conclusively good or conclusively bad news for the company and its share price.

There can be little wonder that the shares of such companies are popular among the ‘get-rich-quick’ brigade of speculators and spread bet punters.

For the companies themselves, what this means is that having a regular schedule of new drilling opportunities is a sure fire way to maintain interest from the investment community and keep sufficient capital in the coffers (so long as they keep a decent track record).

Well successes elevated Hurricane

In certain cases, a successful well campaign can pay off big time.

Looking back to Hurricane, it is plain to see that the series of successful discovery and appraisal wells in 2016 and 2017 marked a very significant threshold for the company.

Since then, it has banked over US$0.5bn of funding from private equity backers, it landed a US$387mln partnership with Centrica’s Spirit Energy, and its shares are now valued at around £900mln.

Importantly, the Lancaster field is now on the cusp of production. Producing at a rate of 17,000 barrels daily, Hurricane expects the Lancaster EPS to generate some US$200mln of cash flow per year, assuming a Brent oil price of US$60 (presently cUS$72).

Achieving this will elevate the company into an exploration and production peer group that includes the likes of Premier Oil, EnQuest and Tullow Oil (albeit, in production terms, it remains smaller than those).

Hurricane is no longer comparable to the pre-revenue explorers and frontier drillers, though that has possibly already been the case for some time.

Patience is a virtue, for long-term holders

Companies, and significantly their valuations, can endure a malaise as they transition from big bang exploration driller to field developer and eventually a fully-fledged producer.

Design studies, project financing, and engineering work programmes seemingly don’t attach the same excitement as the roulette wheel experience of frontier exploration.

This is, however, a vitally significant period in the maturation of successful exploration companies. 

Moreover, the graduation period into production opens up to a different kind of investor.

No longer is a company the focus of the get-rich-quick brigade. Instead, the shareholder register is increasingly filled with more long-term minded investors.

Concurrently, however, the valuation becomes less about theoretical or future barrels of oil, instead, the company starts being judged by the number of barrels it is actually getting out of the ground.

Financial reporting stops being an almost irrelevant regulatory obligation, and the numbers are scrutinised increasingly. 

Suddenly, the economics of the global crude market and the prevailing price of a barrel matters much more. 

That debt-financing - which was lauded years ago because it avoided shareholder dilution - now, increasingly, weighs like a burden. 

How quickly is it being repaid? Will an equity conversation create an overhang of surplus shares in the market? 

As creditors want repayment, the shareholders also now want income. 

So, how much is the dividend and is it sustainable? 

Then arrives the issue of sustaining an oil business over the longer term. 

How long is the field’s life span? Is the company replacing its reserves? Is there any room in the budget to invest in the next growth project?

Obviously, these are good problems for oil executives to have – after all, it means they’re a success, they’ve delivered the ‘transformational’ growth as they’ve always promised.

But, these are much more nuanced questions compared to the earlier binary question of whether the well has oil or not.

The comparative simplicity is part of the reason why many speculative investors prefer to bet on companies searching for assets, over companies trying to turn discovered resources into a profitable business.

Potential for takeover or partial sale lurks in the background 

Evidently, Hurricane is a rare dual-thread opportunity for investors. 

With the Spirit-funded drill programme and the pending delivery of the Lancaster EPS, the company perhaps offers a ‘best of both’ proposition.

The remainder of 2019 represents a busy period with huge value creation possibilities – whichever way you like your oil investments.

If neither narrative suits, there’s still the ever-lurking prospect of a big money takeover.

The chances of a company like Hurricane being snapped up by a much larger oil company is rarely at the forefront of discussion, but it is probably more than simply a vague possibility.

On paper, Hurricane’s portfolio holds an already very significant endowment of resources - the combined figure for reserves and resources is pitched at around 3.3bn barrels of crude. 

These barrels may be ‘upgraded’ and additional resource barrels may be added through continuing drilling.

Whilst oil majors have been selling off their smaller or older assets in UK offshore, there has notably been an uptick in mergers and acquisition activity – in the industry generally, and, to some extent in the UK specifically.

Earlier this year, Faroe Petroleum was taken out by DNO in a £641.7mln deal while, back in 2017, Israel’s Dekel Group acquired Ithaca Energy for US$1.24bn.

Both companies, at the time of the bids, could boast material production volumes and visibility into larger developments for future production. 

The same could be said for Hurricane, though frankly on a potentially much larger scale.

At the same time, Hurricane will at some point in the future need to secure a much more substantial project financing if it is to take its assets to development - for context, the Lancaster EPS addresses only 37mln barrels of the 1.7bn seen across the whole GLA.

Full-scale project financing, possibly in the form of a partnership deal, and/or takeover talks are likely issues for the future. 

In the meantime, investors of all persuasions can look forward to a busy summer for Hurricane Energy. 

]]>
Wed, 17 Apr 2019 12:40:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/218771/what-do-investors-want-from-companies-such-as-hurricane-energy-218771.html
<![CDATA[News - Hurricane Energy: Centrica’s Spirit kicks off Warwick drill campaign ]]> https://www.proactiveinvestors.co.uk/companies/news/218744/hurricane-energy-centricas-spirit-kicks-off-warwick-drill-campaign-218744.html Hurricane Energy PLC (LON:HUR) has announced the spudding of the Warwick Deep exploration well, the first to be drilled in partnership with Centrica PLC-backed Spirit Energy.

It is the first of three planned wells in the programme, which will assess the Greater Warwick Area (GWA), which comprises the Lincoln discovery and the previously untested Warwick prospect.

The GWA is believed to be a continuation of the large oil reservoirs seen at the Lancaster field, though the two areas are separated by a fault.

READ: Hurricane Energy's move into production will cap impressive story

Hurricane retains a 50% stake in the GWA following its farm-out deal to Spirit, which committed to fund and execute the drilling campaign.

In all, Spirit is to cover Hurricane’s costs in the GWA, up to US$387mln across five potential phases of work.

The proven Lincoln discovery was estimated to host some 604mln barrels of contingent resources, while Warwick’s prospective resource was pitched at 935mln barrels.

Clearly, a success in the Warwick Deep well could represent a significant upgrade to the GWA project whilst the overall three-well programme aims to bring it towards an initial development scenario.

In addition to the three wells planned this year, a further three appraisal/development wells are slated for a follow-up programme in 2020 – which could, all subject to results, see ‘first oil’ from the GWA either late next year or early 2021.

In the meantime, over the fault, Hurricane is advancing operation at Lancaster to deliver ‘first oil’ production in the coming months.

The Lancaster early production system subsequently aims to ramp up to a rate of 17,000 bopd, providing valuable cash flows and, importantly, provide de-risking production data that will support planning for a much larger field development in the future.

In the Greater Lancaster Area (GLA) – comprising Lancaster and the Halifax discovery – Hurricane sees some 1.7bn barrels of crude resources.

Spirit Energy is 69% owned by British Gas parent Centrica PLC (LON:CNA).

]]>
Wed, 17 Apr 2019 07:51:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/218744/hurricane-energy-centricas-spirit-kicks-off-warwick-drill-campaign-218744.html
<![CDATA[RNS press release - 'Warwick Deep' 205/26b-C Well Spud ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190417070003_14043810/ Wed, 17 Apr 2019 07:00:03 +0100 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190417070003_14043810/ <![CDATA[RNS press release - Block Listing Application ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190329070009_14020461/ Fri, 29 Mar 2019 07:00:09 +0000 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190329070009_14020461/ <![CDATA[News - Hurricane Energy looks ahead to exciting phase as it nears production and new exploration ]]> https://www.proactiveinvestors.co.uk/companies/news/217398/hurricane-energy-looks-ahead-to-exciting-phase-as-it-nears-production-and-new-exploration-217398.html Hurricane Energy PLC (LON:HUR) chief executive Dr Robert Trice said on Thursday that it is set for an “exciting period”.

The AIM-quoted firm is now counting down to the first production from the Lancaster field’s ‘early production system’ which will yield some 17,000 barrel of oil per day, and, perhaps more importantly, de-risk a much larger field development.

A new exploration programme is expected to start later this year, paid for by farm-in partner Spirit Energy (which dealt in the Greater Warwick Area, separate from Lancaster).

READ: Hurricane Energy's move into production will cap impressive story

“The Spirit farm-in has significantly accelerated activity on the GWA, providing up to $387mln for a phased work programme,” Trice said, in a statement.

“This includes the drilling of three wells in 2019 with a minimal net cost to Hurricane, targeting first oil from a tie-back to the Aoka Mizu in 2020.”

As Spirit paid for exploration drilling, Hurricane is able to afford development and appraisal activities at Lancaster.

Whilst exploration and appraisal upside will be on the agenda as 2019 progresses, the focus for Hurricane and its investors is now on the delivery of the Lancaster EPS.  Earlier this month, Hurricane confirmed it had successfully hooked up its floating production vessel to the Lancaster infrastructure – after previous failed attempts.

Significant cash flow on the horizon

"We will soon be generating the long-term production data that will enable the company to plan for full field development of the Greater Lancaster Area (GLA).

“Initial production is planned to be 17,000 barrels of oil per day, net of anticipated downtime. At this rate, we expect to generate significant cash flow - over $200 million in operating cash flow on a full year run-rate basis at a $60/bbl Brent oil price.”

In terms of the 2018 financial results, the pre-revenue company reported a US$60.9mln loss after tax – with some US$42.4mln coming from a non-cash fair value loss for a derivative instrument attached to previously issued convertible bonds.

Hurricane spent some US$205.3mln of development cash on the Lancaster EPS project while other operating expenses were reported at US$12.7mln.

It ended the year with US$83mln of ‘useable funds’ - including cash, equivalents and liquid investments, but excluding restricted cash.

The company has some US$230mln of convertible bonds in issue – US$34.5mln was previously put in escrow to cover the coupon for the first two years, and thus far US$21.6mln has been paid out.

They mature in July 2022, if they’re not converted into equity. The initial conversion price was set at 52 American cents per share, which represented a 25% premium at the time. A financial derivative is in place, connected to the equity conversion option.

Hurricane noted in its results that one of its ‘tier one’ contractors has agreed to defer up to US$18mln of invoices until September 2019, accruing interest at an annualised rate of 7%, and, that provides the company with additional working capital in the meantime. For context, Hurricane had US$21.3mln worth of total trade creditors at the end of December (including the deferred US$18mln).

In a note to clients, analysts at Peel Hunt said; “With no production/revenue to date, net income was in line at -$61m (consensus -$62m), and with a YE cash position of $83m (excluding restricted cash).”

In late afternoon trading, shares in Hurricane Energy 1.2% lower at 46.36p.

 -- Adds analyst comment, share price --

]]>
Thu, 28 Mar 2019 08:20:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/217398/hurricane-energy-looks-ahead-to-exciting-phase-as-it-nears-production-and-new-exploration-217398.html
<![CDATA[RNS press release - Final Results ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190328070014_14018660/ Thu, 28 Mar 2019 07:00:14 +0000 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190328070014_14018660/ <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190327070005_14016912/ Wed, 27 Mar 2019 07:00:05 +0000 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190327070005_14016912/ <![CDATA[News - Hurricane Energy shares rise as it hooks up Aoka Mizu FPSO to Lancaster field ]]> https://www.proactiveinvestors.co.uk/companies/news/216736/hurricane-energy-shares-rise-as-it-hooks-up-aoka-mizu-fpso-to-lancaster-field-216736.html Hurricane Energy plc (LON:HUR) shares nudged higher on Tuesday as UK oil field developer confirmed that, after failed previous attempts, it has now hooked up the Aoka Mizu floating production vessel to the Lancaster field’s infrastructure.

In a statement the company said that the vessel arrived at the field on March 17and it was hooked up to the Lancaster turret mooring system on 19 March. It is now on station and securely moored, Hurricane added.

READ: Hurricane Energy's move into production will cap impressive story

The offshore oiler will continue to press ahead with operations to start production in the coming months.

“After first oil, Hurricane anticipates a gradual ramp-up of production towards its planned average plateau rate of 17,000 barrels of oil per day, net of operating efficiency,” Hurricane said in the statement.

In London, the share moved up 1.46p or 2.95% to change hands at 50.77p.

]]>
Tue, 19 Mar 2019 08:48:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/216736/hurricane-energy-shares-rise-as-it-hooks-up-aoka-mizu-fpso-to-lancaster-field-216736.html
<![CDATA[RNS press release - Operational Update ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190319081504_14007210/ Tue, 19 Mar 2019 08:15:04 +0000 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190319081504_14007210/ <![CDATA[News - Hurricane Energy's move into production will cap impressive story ]]> https://www.proactiveinvestors.co.uk/companies/news/215637/hurricane-energy-s-move-into-production-will-cap-impressive-story-215637.html  

What it owns Lancaster

A floating oil platform Aoka Mizu has arrived at the Lancaster field, though it has hit a few snags getting anchored to the buoy.  

Lancaster’s start-up will dovetail with a multi-well drilling campaign, comprising exploration and appraisal.

That programme is being supported by new joint venture partner Spirit Energy (part-owned by Centrica).

Extended production will allow Hurricane to gain a better understanding of the reservoir for all of its licences.

In September, Spirit dealt into the Greater Warwick portion of Hurricane’s West of Shetland portfolio.

Together, the Greater Lancaster (GLA) and Greater Warwick (GWA) areas span a large geologic feature known as the Rona Ridge.

The deal with Spirit Energy sees Hurricane trading away 50% of the Greater Warwick Area in return for US$387mln for well-drilling and development programme that aims to deliver production by 2020.

Cashflows from the Lancaster EPS can now be reinvested back in the larger Lancaster field development (rather than fund exploration and appraisal activity), said Hurricane.

 

Greater Warwick Area

Spirit’s Phase 1 programme will see three new wells drilled.

It aims to accelerate the appraisal of Lincoln and confirm the Warwick discovery.

Hurricane will be ‘carried’ in the US$180.6mln initial drilling programme.

A rig contract has already been signed with Transocean for drilling to start in early 2019.

In Phase 2, assuming prior wells are successful, Spirit will lead field development work aimed at connecting the GWA fields to infrastructure due to be in place at the Lancaster field which, at that point, would be online.

Spirit is expected to spend some US$187mln on this phase of work, which will include upgrades to the Aoka Mizu floating production, storage and offloading (FPSO) vessel, pipelines, and other engineering.

Presently, the initial GWA development is suggested as a single well tie-back to Lancaster’s Aoka Mizu for some 10,000 barrels of oil per day.

Also, Spirit will be expected to contribute some US$150-250mln to cover Hurricane’s share of additional, contingent costs of a larger field development at the GWA.

 

What the boss says: Robert Trice, chief executive

"As we approach first oil on Lancaster, which remains on track for 1H 2019, we have increased financial flexibility and two parallel work programmes to drive our Rona Ridge Resources towards monetisation."

 

Video

 

Inflexion points

Aoka Mizu attached

First production from Lancaster

Exploration drilling gets underway at GWA

  Blue Sky

Fractured basement reservoirs exist in many parts of the world

UK success can be a blueprint for other areas

Potential to find substantial more oil West of Shetland

]]>
Fri, 01 Mar 2019 14:30:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/215637/hurricane-energy-s-move-into-production-will-cap-impressive-story-215637.html
<![CDATA[News - Hurricane Energy buoy hook-up operation hits another snag ]]> https://www.proactiveinvestors.co.uk/companies/news/213874/hurricane-energy-buoy-hook-up-operation-hits-another-snag-213874.html Hurricane Energy PLC (LON:HUR) will have to wait to complete the buoy hook-up operation as it makes the final, crucial preparations for its planned early production system on the Lancaster Field, in the waters west of Shetland.

On Saturday (Feb 2) the pull-in rope failed. There were no casualties and the buoy returned to its starting position and is not damaged.

READ: Hurricane Energy updates on operations amid predictions of worsening weather conditions

The Aoka Mizu vessel is returning to the Cromarty Firth to await delivery of a new pull-in rope, Hurricane said.

Last month, the company’s hook-up operation was foiled when a rope became snagged.

In a note to clients, analysts at SPAngel commented: “The continued issues with the morning buoy are unfortunate, but not altogether unheard of. Given that this equipment if not strictly ‘standard’ isn’t new technology, we believe that it has been a run or bad luck, opposed to anything more sinister.

“Consequently, any weakness on the back of this news is to be taken advantage by investors who back the longer-term valuation story.”

In late afternoon trading, shares in Hurricane Energy were 5.7% lower at 46.98p.

 -- Adds analyst comment, share price --

]]>
Mon, 04 Feb 2019 07:54:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/213874/hurricane-energy-buoy-hook-up-operation-hits-another-snag-213874.html
<![CDATA[RNS press release - Operational Update ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190204070005_13956307/ Mon, 04 Feb 2019 07:00:05 +0000 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190204070005_13956307/ <![CDATA[RNS press release - Award of Shares under the Share Incentive Plan ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190125104501_13947248/ Fri, 25 Jan 2019 10:45:01 +0000 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190125104501_13947248/ <![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190123170003_13944633/ Wed, 23 Jan 2019 17:00:03 +0000 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190123170003_13944633/ <![CDATA[News - Hurricane Energy updates on operations amid predictions of worsening weather conditions ]]> https://www.proactiveinvestors.co.uk/companies/news/212939/hurricane-energy-updates-on-operations-amid-predictions-of-worsening-weather-conditions-212939.html Hurricane Energy PLC (LON:HUR) has updated on the Lancaster field’s early production system development where progress has stalled somewhat amid a predicted worsening of weather conditions and an operational hiccup.

“During the buoy hook-up operation on 18 January 2019, the rope being used to pull in the buoy became snagged and it was not possible to complete the hook-up operation,” Hurricane explained in a stock market statement.

READ: Hurricane set for double-busy period, after new farm-out deal

It added: “The rope has now been freed and the buoy returned to its starting position.”

The company noted that the Aoka Mizu FPSO vessel has since returned to the Cromarty Firth where remediation work on the buoy pull-in system will be completed.

Subsequently, Hurricane will prepare for the next opportunity to pull in the buoy.

“A further announcement will be issued once hook-up has been successfully completed,” Hurricane added.

The Early Production System, which will initially yield around 17,000 barrels of oil per day, is scheduled for start-up in the first half of 2019.

Weakness an investment opportunity

In a note to clients, analysts at SPAngel commented: “The news that the buoy hook-up didn’t happen as planned will be a disappointment. However, it must be remembered that the combination of scale, environment and complexity mean that sometimes it is better to retire and retry when the environment is suitable, that to push on and risk a more complicated and expensive issue to arise, which can result in longer delays.”

They added: “Initial commissioning is a difficult enough process without it being located offshore, so retiring off station to ensure that all the equipment is serviceable is not only the right choice, but we believe in this case it’s the only choice.

“Any pressure on the share price today should be seen as an investment opportunity.”

In early afternoon trading, Hurricane Energy shares were 3.5% lower at 47.70p.

 -- Adds analyst comment, share price --

]]>
Mon, 21 Jan 2019 07:48:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/212939/hurricane-energy-updates-on-operations-amid-predictions-of-worsening-weather-conditions-212939.html
<![CDATA[RNS press release - Operational Update ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190121070006_13940436/ Mon, 21 Jan 2019 07:00:06 +0000 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190121070006_13940436/ <![CDATA[RNS press release - Appointment of Non-Executive Director ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190103135129_13923117/ Thu, 03 Jan 2019 13:51:29 +0000 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20190103135129_13923117/ <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20181207161002_13896459/ Fri, 07 Dec 2018 16:10:02 +0000 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20181207161002_13896459/ <![CDATA[RNS press release - Director's Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20181127070025_13881103/ Tue, 27 Nov 2018 07:00:25 +0000 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20181127070025_13881103/ <![CDATA[News - Hurricane Energy: Aoka Mizu FPSO makes scheduled stop in Algeciras en route to Lancaster ]]> https://www.proactiveinvestors.co.uk/companies/news/209062/hurricane-energy-aoka-mizu-fpso-makes-scheduled-stop-in-algeciras-en-route-to-lancaster-209062.html The Aoka Mizu floating production storage and offloading vessel, which is on its way to Hurricane Energy PLC’s (LON:HUR) Lancaster field development off the west coast of the Shetland Islands, has put into Algeciras, Spain for planned personnel changes and bunkering.

The FPSO left Dubai almost a month ago and is headed for Rotterdam where it will undergo a final scope of work before moving on to Lancaster.

READ: Aoka Mizu leaves Dubai

Hurricane said the stopover in Algeciras, next to Gibraltar on Spain’s south coast, will be extended so work to repair an auxiliary system associated with power generation can be carried out.

The £850mln company added that commissioning activities which were being undertaken during transit will continue.

Hurricane’s previous communications have indicated that the FPSO is expected to arrive at Lancaster in the fourth quarter.

The Early Production System, which will initially yield around 17,000 barrels of oil per day, is scheduled for start-up in the first half of 2019.

]]>
Tue, 13 Nov 2018 07:25:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/209062/hurricane-energy-aoka-mizu-fpso-makes-scheduled-stop-in-algeciras-en-route-to-lancaster-209062.html
<![CDATA[RNS press release - Operational Update ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20181113070007_13864192/ Tue, 13 Nov 2018 07:00:07 +0000 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20181113070007_13864192/ <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20181016070012_13829676/ Tue, 16 Oct 2018 07:00:12 +0100 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20181016070012_13829676/ <![CDATA[News - Hurricane Energy passes another key milestone ahead of Lancaster field start-up ]]> https://www.proactiveinvestors.co.uk/companies/news/207087/hurricane-energy-passes-another-key-milestone-ahead-of-lancaster-field-start-up-207087.html Hurricane Energy PLC (LON:HUR) has chalked off another potential stumbling block, as this morning it confirmed that a key milestone towards ‘first oil’ at the Lancaster field.

The oil field developer, in a stock market statement, told investors that the Aoka Mizu FPSO vessel has now departed Dubai, where it was upgraded in dry-dock.

READ: Hurricane Energy tipped for re-rating as first production draws nearer

The specialised vessel will sail to Rotterdam, where it will undergo a final scope of work, before moving on to the Lancaster field. Meanwhile, at the field, the final stages of site preparations (including a programme of rock dumping to protect sub-sea infrastructure) has now been completed.

Hurricane’s previous communications have indicated that the FPSO is expected to arrive in the fourth quarter.

It means that the Lancaster early production, which will yield around 17,000 barrels of oil per day, remains on-track for start-up at some point in the first half of 2019.

Analysts at SP Angel, in a note, said: “This is really one of the last publicly identifiable hurdles that needs clearing before the FPSO arrives onsite and production commences, which given the genesis of the Company is a significant achievement.

“We do not expect too many more of these announcements before first oil, which is when the real hard work begins.”

Lancaster start-up to dovetail with new drilling

Lancaster’s start-up will dovetail with a multi-well drilling campaign, comprising exploration and appraisal.

The programme is being supported by new joint venture partner Spirit Energy (part-owned by Centrica), which in September dealt into the Greater Warwick portion of Hurricane’s West of Shetland portfolio – together, the Greater Lancaster (GLA) and Greater Warwick (GWA) areas span a large geologic feature known as the Rhona Ridge.

At GLA, the start-up of the Lancaster EPS is the priority while across at GWA, the well-drilling programme will be the focus.

The deal with Spirit Energy sees Hurricane trading away 50% of the Greater Warwick Area in return for a US$387mln promise of funding for a well-drilling programme and an initial field development programme that aims to deliver production by 2020.

Hurricane highlighted that the deal unlocks the GWA programme and significantly means that cashflows from the Lancaster EPS can be reinvested back in the larger Lancaster field development (rather than fund exploration and appraisal activity).

"This transaction allows us to accelerate monetisation of our GWA resource base through a work programme designed to target significant reserve growth,” Hurricane chief executive Dr Robert Trice said, last month.

Trice added: "As we approach first oil on Lancaster, which remains on track for 1H 2019, we have increased financial flexibility and two parallel work programmes to drive our Rona Ridge Resources towards monetisation."

A busy year on the horizon

Spirit’s Phase 1 programme will see three new wells drilled. It aims to accelerate the appraisal of Lincoln and confirm the Warwick discovery. Hurricane will be ‘carried’ in the US$180.6mln initial drilling programme. A rig contract has already been signed, with Transocean, for drilling to start in early 2019.

In Phase 2, assuming prior wells are successful, Spirit will lead field development work aimed at connecting the GWA fields to infrastructure due to be in place at the Lancaster field which, at that point, would be online.

Spirit is expected to spend some US$187mln on this phase of work, which will include upgrades to the Aoka Mizu floating production, storage and offloading (FPSO) vessel, pipelines, and other engineering.

Presently, the initial GWA development is suggested as a single well tie-back to Lancaster’s Aoka Mizu for some 10,000 barrels of oil per day. Also, Spirit will be expected to contribute some US$150-250mln to cover Hurricane’s share of additional, contingent costs of a larger field development at the GWA.

]]>
Mon, 15 Oct 2018 12:44:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/207087/hurricane-energy-passes-another-key-milestone-ahead-of-lancaster-field-start-up-207087.html
<![CDATA[News - Hurricane Energy says Aoka Mizu FPSO has now left Dubai ]]> https://www.proactiveinvestors.co.uk/companies/news/207047/hurricane-energy-says-aoka-mizu-fpso-has-now-left-dubai-207047.html Hurricane Energy Plc’s (LON:HUR) Lancaster field development has seen another key milestone as the Aoka Mizu FPSO vessel has now departed Dubai, where it was upgraded in dry-dock.

The specialised vessel will sail to Rotterdam, where it will undergo a final scope of work, before moving on to the Lancaster field.

Meanwhile, at the field, the final stages of site preparations (including a programme of rock dumping to protect sub-sea infrastructure) has now been completed.

READ: Hurricane Energy set for doubly-busy period, thanks to new farm-out deal

Hurricane’s previous communications have indicated that the FPSO is expected to arrive in the fourth quarter.

It keeps the Lancaster Early Production System on-track for start-up in the first half of 2019, with the initial scale development due to deliver 17,000 bopd from just a small portion of the large Lancaster oil discovery.

Hurricane’s growth story recently evolved further with something of a breakthrough farm-out deal, selling a 50% in the Greater Warwick Area – an exploration and appraisal project located adjacent to the Lancaster field.

The deal secured nearly US$400mln of spending commitments from Hurricane’s new partner Spirit Energy, which is part-owned by UK energy utility Centrica PLC.

It will pay for a new round of well drilling and, subject to results, the development of a second source of production (which would also be tied into the Aoka Mizu).

]]>
Mon, 15 Oct 2018 07:49:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/207047/hurricane-energy-says-aoka-mizu-fpso-has-now-left-dubai-207047.html
<![CDATA[RNS press release - Operational Update ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20181015070004_13827879/ Mon, 15 Oct 2018 07:00:04 +0100 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20181015070004_13827879/ <![CDATA[RNS press release - Holding(s) in Company ]]> https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20181004070008_13815808/ Thu, 04 Oct 2018 07:00:08 +0100 https://www.proactiveinvestors.co.uk/companies/rns/4084/LSE20181004070008_13815808/ <![CDATA[News - Hurricane Energy tipped for re-rating as first production draws nearer ]]> https://www.proactiveinvestors.co.uk/companies/news/205340/hurricane-energy-tipped-for-re-rating-as-first-production-draws-nearer-205340.html Hurricane Energy PLC (LON:HUR) received more punchy estimates of its value following interim results this morning.

Cantor Fitzgerald has gone with an 87p target price (and a buy rating) while RBC Capital suggests the UK Continental Shelf-focused oil and gas developer is worth 90p.

"We anticipate the realisation of near-term production as offering an opportunity for a re-rating of the stock, and believe the Spirit deal delivers further opportunities for value to be unlocked," said Cantor.

“The path to monetising the world class asset base is clear, and we believe that investor interest can only grow as the company continues to deliver on targets."

Cantor highlighted the recent Greater Warwick farm-out deal with Spirit Energy as a significant achievement but added the emphasis in 2018 was always centred on the Lancaster EPS development.

READ: Hurricane Energy counts down to FPSO ‘sailaway’ as Lancaster stays on-track for first oil

RBC added that unusually for an E&P company, Hurricane has kept to the development schedule set out in 2016 for the Lancaster EPS project with first oil expected next year.

Floating production vessel Aoka Mizu is expected to arrive in the fourth quarter.

Hurricane ended the half with cash of US$210mln, slightly less than the broker expected due to higher capex than forecast.

Shares rose 3% to 55.2p valuing Hurricane at £1.05bn.

 

 

 

]]>
Thu, 20 Sep 2018 13:10:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/205340/hurricane-energy-tipped-for-re-rating-as-first-production-draws-nearer-205340.html