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Hurricane Energy PLC - Operational Update

RNS Number : 8019K
Hurricane Energy PLC
02 September 2019
 

2 September 2019

 

Hurricane Energy plc

 

("Hurricane" or the "Company")

 

Operational Update:

Lancaster EPS and Lincoln Crestal Well

 

Hurricane Energy plc, the UK based oil and gas company focused on hydrocarbon resources in naturally fractured basement reservoirs, is pleased to provide an operational update in relation to the Lancaster Early Production System ("Lancaster EPS") and the 205/26b-14 well ("Lincoln Crestal").

 

Highlights

 

·     Lancaster EPS system availability and production since First Oil above guidance

·     Average production rate of c. 14,400 barrels of oil per day ("bopd") from First Oil to latest lifting on 17 August

·     1.2 million barrels of crude oil sold to date

·     Lincoln Crestal well now being prepared for drill stem testing

 

Lancaster EPS

 

The start-up phase of the Lancaster EPS commenced with introduction of hydrocarbons on 11 May 2019. The first oil milestone ("First Oil") was achieved on 4 June 2019. For a significant portion of the period from First Oil to date, production has been constrained by the use of only one of two subsea flowlines, as a result of operational necessity. This has limited maximum production capacity and Hurricane's ability to carry out activities planned to increase the Company's understanding of the reservoir's performance. Notwithstanding this constraint, since First Oil, Lancaster EPS system availability, production and cash flow generation have been above Company guidance.

 

Operations have now recommenced with two flowlines. As operations move into the next phase of commissioning over the coming months, production and availability are likely to be constrained as certain planned works and delayed data gathering activities will require periods of production shut-in. Hurricane therefore expects system availability to revert towards prior guidance, being 45% for Q3 and 65% for Q4.

 

Lancaster EPS performance to date:

·     Average production rate: c. 14,400 bopd from First Oil to latest lifting on 17 August 2019

·     Total crude oil liftings: 1.2 million barrels over three cargos

·     Overall system availability: currently in excess of 85% long term guidance

·     Most recent aggregate stabilised water cut: 7.5%

 

Hurricane's analysis of water production continues to indicate the presence within expected ranges of stranded or perched water, with no indications of aquifer water. Production over the last month has been through a single flowline and therefore water cut cannot be attributed between the two wells. Further data will be available now that production through both flowlines has recommenced. This will facilitate better understanding of individual well performance and water cut. It will also allow planned flow rate variation to be undertaken, in order to optimise well performance.

 

Forward commissioning for the Lancaster EPS over the coming months will include:

·     Fuel gas compressor commissioning to reduce long-term flaring levels and operational expenditure

·     Produced water system commissioning activities

·     Return to dual flowline operations

Further operational commentary on Lancaster EPS performance will be made in Hurricane's 2019 interim results, scheduled for release on 20 September 2019.

 

Hurricane maintains its production guidance for the second half of 2019 at the aggregate level (Approximately 11,000 bopd based on previously advised expected system availabilities of 45% in Q3 and 65% in Q4).

 

Lincoln Crestal Update

 

Lincoln Crestal is the second well in a three-well programme on Lincoln and Warwick (the "Greater Warwick Area") being drilled in partnership with Spirit Energy following their farm-in to 50% of the Greater Warwick Area in September 2018. The wells are being drilled using the Transocean Leader semi-submersible drilling rig.

 

Lincoln Crestal was spudded on 12 July 2019 and has now reached total depth of 1,780 m TVDSS, including a 720 m horizontal section of fractured basement reservoir. Lincoln Crestal operations have now moved onto preparation for drill stem testing. A further update will be made following the completion of this stage.

 

Dr Robert Trice, Chief Executive of Hurricane, commented:

 

"We are delighted to provide an update on Lancaster EPS progress and to communicate that our production levels have been above expectations for this early phase of operations. However, despite these promising results, we remain cognisant that it will take up to a year to acquire and interpret sufficient performance information to test our reservoir model of the field.

 

"Now that we are back to flowing the Lancaster wells through separate flowlines, we look forward to gathering data on individual well performance to help optimise well delivery as well as improve the Company's understanding of the reservoir's performance.

 

"On the Greater Warwick Area, Lincoln Crestal well operations are now progressing to drill stem testing. We look forward to reporting the result shortly."

 

Contacts: 

 

Hurricane Energy plc

Dr Robert Trice, Chief Executive Officer

Alistair Stobie, Chief Financial Officer

 

+44 (0)1483 862 820

Stifel Nicolaus Europe Limited

Nominated Adviser & Joint Corporate Broker

Callum Stewart / Nicholas Rhodes / Ashton Clanfield

 

+44 (0)20 7710 7600

Morgan Stanley & Co. International plc

Joint Corporate Broker

Andrew Foster / Tom Perry / Alex Smart

 

+44 (0)20 7425 8000

Vigo Communications

Public Relations

Patrick d'Ancona / Ben Simons

[email protected]

+44 (0)20 7390 0230

 

About Hurricane

 

Hurricane was established to discover, appraise and develop hydrocarbon resources associated with naturally fractured basement reservoirs. The Company's acreage is concentrated on the Rona Ridge, in the West of Shetland region of the UK Continental Shelf.

 

The Lancaster field (100%) is the UK's first producing basement field. Hurricane is pursuing a phased development of Lancaster, starting with an Early Production System consisting of two wells tied-back to the Aoka Mizu FPSO. This development is initially expected to produce an average of 17,000 bopd (gross production of 20,000 bopd with assumed operating efficiency of 85%, following a period of ramp-up). Hydrocarbons were introduced to the FPSO system on 11 May 2019 and the 'First Oil' milestone was achieved on 4 June 2019.

 

Hurricane's other assets include Lincoln (50%), Warwick (50%), Halifax (100%), Whirlwind (100%), and Strathmore (100%). Together with Lancaster, these assets have total combined 2P reserves and 2C contingent resources of 2.6 billion barrels of oil equivalent (2.3 billion barrels of oil equivalent net to Hurricane).

 

In September 2018, Spirit Energy farmed-in to 50% of the Lincoln and Warwick assets, committing to a five-phase work programme targeting sanction of full field development in 2021. The first phase of the programme includes the drilling and testing of three wells in 2019, which is being carried out using the Transocean Leader semi-submersible drilling rig. Lincoln Crestal is the second well and was spudded on 12 July 2019.

 

Glossary

2P Reserves

Proved plus probable reserves under the Society of Petroleum Engineers' Petroleum Resources Management System

2C Contingent resources

Best case contingent resources under the Society of Petroleum Engineers' Petroleum Resources Management System

bopd

Barrels of oil per day

FPSO

Floating production storage and offloading vessel

Greater Warwick Area

Lincoln discovery and Warwick prospect located on UKCS licences P1368 South and P2294

Lancaster EPS

Lancaster Early Production System

Lincoln Crestal

205/26b-14 well

Spirit Energy

Spirit Energy Limited

TDVSS

Total vertical distance subsea

UKCS

UK Continental Shelf

 

Inside Information

 

This announcement contains inside information as stipulated under the market abuse regulation (EU no. 596/2014). Upon the publication of this announcement via regulatory information service this inside information is now considered to be in the public domain.

 

Competent Person

 

The technical information in this release has been reviewed by Dr Robert Trice, who is a qualified person for the purposes of the AIM Guidance Note for Mining, Oil and Gas Companies. Dr Robert Trice, Chief Executive Officer of Hurricane Energy plc, is a geologist and geoscientist with a PhD in geology and has over 30 years' experience in the oil and gas industry.

 

Standard

 

Resource estimates contained in this announcement have been prepared in accordance with the Petroleum Resource Management System guidelines endorsed by the Society of Petroleum Engineers, World Petroleum Congress, American Association of Petroleum Geologists and Society of Petroleum Evaluation Engineers.


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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