Hurricane Energy PLC Operational and Corporate Update (4425B)
October 08 2020 - 2:00AM
UK Regulatory
TIDMHUR
RNS Number : 4425B
Hurricane Energy PLC
08 October 2020
8 October 2020
Hurricane Energy plc
("Hurricane" or the "Company")
Operational and Corporate Update
Hurricane Energy plc, the UK based oil and gas company, provides
an operational and corporate update.
Lancaster EPS Production Update
Q2 2020 Q3 2020 Current
Oil Production (MMbbls) 1.30 1.25 N/A
-------- -------- -------
Average Oil Rate (bopd) 14,300 13,600 14,500
-------- -------- -------
Water Cut(1) 21% 26% 19%
-------- -------- -------
1. Expressed as total water produced divided by total fluid (oil and water) production
Oil production in the third quarter of 2020 was at an average
rate of 13,600 bopd, which was lower than the 14,300 bopd average
rate in the second quarter. This was as a result of the shut in of
the 205/21a-7z well from early August, a controlled shutdown of the
FPSO for repairs in August 2020, scheduled annual FPSO maintenance
in early September 2020 and a short shut in of the 205/21a-6 well
for data gathering purposes towards the end of the period.
Since the Company's interim results announcement on 11 September
2020, the Lancaster field has been producing from the 205/21a-6
well alone. Current production is c.14,500 bopd on natural flow
with a water cut of c.19%. In line with the Company's expectations,
the 205/21a-6 well is exhibiting a limited decline in oil
production rate accompanied by a limited increase in water cut.
Average production guidance of 12,000 - 14,000 bopd for the
period 1 September 2020 to 31 December 2020 remains unchanged.
The 17(th) cargo of Lancaster oil is scheduled for lifting in
mid-October 2020.
Decommissioning Financing Update
As part of the original Lancaster Field Development Plan
approval, Hurricane was required to provide security for its
decommissioning liability on the Lancaster field on a post-tax
basis. As previously disclosed, this has been satisfied by way of a
decommissioning bond since February 2019.
In accordance with the terms of the decommissioning bond
agreement, and given the fall in oil prices earlier in 2020 and the
recent downward revision to the Lancaster field's reserves, the
bond provider has requested that the Company provide cash
collateral for 100% of the bond's value, as a result of which the
Company would derive no benefit from the bond while still paying
fees to the bond provider. The decommissioning bond has therefore
been terminated by mutual agreement.
Consequently, the Company has reverted to the arrangement in
place prior to the decommissioning bond, whereby GBP16.8 million
($21.7 million) of cash security will be held in trust in order to
continue meeting the obligation to provide post-tax security for
the estimated cost of decommissioning the production wells, subsea
infrastructure and related FPSO costs for the Lancaster Early
Production System. Accordingly, $21.7 million of the Company's
unrestricted cash has now been reclassified as restricted cash.
Stakeholder Engagement
As disclosed in the interim results announcement, the Company
intends to engage with all key stakeholders regarding its forward
work programme, capital allocation and financing arrangements in
light of the revised reserves estimates for the Lancaster field and
challenging macroeconomic backdrop. The Company is making good
progress on a proposed work programme and will provide further
updates when appropriate.
-ends-
Contacts:
Hurricane Energy plc
Antony Maris, Chief Executive Officer +44 (0)1483 862
Philip Corbett, Head of Investor Relations 820
Stifel Nicolaus Europe Limited
Nominated Adviser & Joint Corporate Broker
Callum Stewart / 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
hurricane@vigocomms.com +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% owned by Hurricane) 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.
Hydrocarbons were introduced to the FPSO system on 11 May 2019 and
the first oil milestone was achieved on 4 June 2019.
In September 2018, Spirit Energy farmed-in to 50% of the Lincoln
and Warwick assets, committing to a phased work programme targeting
sanction of an initial stage of full field development.
Visit Hurricane's website at www.hurricaneenergy.com
Glossary
bopd Barrels of oil per day
FPSO Floating production storage and offloading
vessel
===========================================
MMbbls Million barrels
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END
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