Welcome, welcome one and all to our inaugural Well Watch column where we look at the upcoming drill results from a handful of potential gushers and game-changers.
This isn’t by any means a comprehensive menu of what’s happened and what’s coming up and it is heavily weighted to the smaller end of the market, where a positive result can rocket propel shares.
We kick off with Hurricane Energy Plc (LON:HUR), prompted by a spike in web traffic to an old Proactive report on the Halifax well, which was spudded in mid-January with results expected at the end of the first quarter.
Well, folks Q1 ends next week, which might explain the ridiculous number of eyeballs trained on our January Hurricane coverage.
Just to recap, the Halifax exploration well is located in the Rona Ridge area of the West of Shetland region of the North Sea.
It is around 30 kilometres north of the company’s Lancaster discovery – which was one of the major North Sea finds of the past few years.
Put simply, success at Halifax could potentially reveal that both Lancaster and Halifax as one single entity – a giant oil accumulation spanning the substantial portion of the afore-mentioned Rona Ridge.
As an outsider it is difficult to guess what exactly that means in terms of the project’s eventual scale, but, Hurricane boss Robert Trice points to BP’s Clair field as a possible analogue as it would cover a similar sized area.
Clair is an 8bn-barrel West of Shetland discovery that is expected to have peak production of around 100,000 barrels of oil a day.
It is also possible that the Halifax well may draw a blank (breaking Hurricane’s winning streak with the drill bit), or another possible outcome is that it finds oil but in a distinctly separate reservoir.
It is no wonder then that investors eagerly await the well results.
Currently, Lancaster is estimated to host 300mln barrels of oil; however the company thinks this figure is conservative.
An independent assessment, a competent persons report (CPR), is due in the coming weeks (Hurricane says during Q1) and that will go some way to quantifying the opportunity.
The CPR is looking only at Lancaster - specifically the area defined by the original Lancaster licence area - and it will set the stage for Hurricane’s initial development of the field.
Hurricane intends to advance its planning for an early production system (EPS) to a final investment decision later this year, ahead of a proposed start-up in 2019.
This project will essentially be a pilot or test production operation - a field within a field - albeit one that produces crude at a level most AIM quoted peers would be more than happy with.
The idea is that the EPS will unearth valuable production data, give insight into the kind of recoverability possible at Lancaster, and will yield some 17,000 barrels per day of revenue generating crude production.
For Hurricane at Lancaster the EPS merely represents the start.
Wells to Watch
Hurricane – Halifax well (west of Shetland) results expected by the end of the first quarter (next week).
SDX Energy Inc (LON:SDX) – SD-1X (Nile Delta) kicked off March 20; expected to take 30-45 days. Targeting the lower AEB and Abu Roash sections.
Sound Energy PLC (LON:SOU) – TE-8 (Morocco) at target depth; analysis and sidetrack. Badile (Italy) at the second casing point at 1,400 metres; will be drilled down to 4,445 metres; 100-day drill programme began March 8.