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.
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.
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