Successful Test of Lancaster Well

RNS Number : 5351K

Hurricane Energy PLC

26 June 2014

 

Embargoed: 0700hrs 26 June 2014

Hurricane Energy plc

("Hurricane" or the "Company")

Successful Test of Lancaster Horizontal Appraisal Well

Hurricane Energy plc (AIM: HUR), the UK-based oil and gas company focused on hydrocarbon resources in naturally fractured basement reservoirs, announces that it has successfully completed the testing phase of its key horizontal appraisal well in the Lancaster fractured basement oil discovery West of Shetland. The well will be suspended as a future producer.

Production tests achieved a sustainable oil flow rate using an Electrical Submersible Pump (ESP) of 9,800 stock tank barrels of oil per day (STB/d), the established oil flow rate being constrained by the capacity of the surface test equipment. The Lancaster Field, which is 100 per cent. owned by Hurricane, has estimated 2C Contingent Resources of 207 million barrels of oil equivalent (MMboe).

The testing programme was designed to establish whether commercial hydrocarbon flow rates could be delivered from a 1km horizontal well drilled through faulted and fractured basement rock (granite) under both natural flow and artificial lift conditions.  Artificial lift was achieved through the installation of the down-hole ESP, the inclusion of which was to investigate potential flow rates that could be expected under production conditions.

The headline test results are:

Natural flow - maximum sustainable flow rate of 5,300 STB/d

Artificial lift (using an ESP) - maximum sustainable flow of 9,800 STB/d (the established oil rate being constrained by surface test equipment)

Produced water - 340 barrels of drilling brine were produced during the test of which 20 barrels were recovered during natural flow

Oil type - 38^o API

The Company anticipates making a further announcement following completion of operations and the rig moving off location.

Dr Robert Trice, CEO of Hurricane, commented from the Sedco 712 drilling rig: "I am delighted to report the successful completion of our testing operations which have achieved hydrocarbon flow rates in the upper range of our pre-drill estimates.  The maximum sustainable flow rate of 9,800 STB/d is particularly impressive as it was achieved despite being constrained by surface equipment. Whilst the artificial lift rates are important, the fact that the well also flowed oil at 5,300 STB/d unaided (natural flow) is a clear demonstration that Hurricane's plans for progressing to a Lancaster field development are technically viable.

I consider this year's operational result to be major step in further de-risking the Company's 2C Contingent (444-470MMboe) and P50 Prospective (432-442MMboe) resources and very important as we seek to enhance shareholder value. This successful outcome reinforces the potential importance of basement resources as a strategic resource for the UK."

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Contact Details:

Hurricane Energy plc	Nicholas Mardon Taylor Chief Financial Officer	[phone]	[e-mail] www.hurricaneenergy.com
Cenkos Securities plc	Derrick Lee Beth McKiernan	[phone]	[e-mail] [e-mail]
Media enquiries: Vigo Communications	Patrick d'Ancona Ben Simons	[phone] [phone]	[e-mail]

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 25 years' experience in the oil and gas industry. 

Notes for Editors:

Hurricane is an oil and gas company focused on hydrocarbon resources in naturally fractured basement reservoirs. The Company's focus is to discover, appraise and develop oil reserves in basement rock and has successfully found oil on the UKCS. The Company has 444-470 Mmboe of 2C Contingent Resources and 432-442 Mmboe P50 Prospective Resources on acreage it controls 100% under licences P1368, P1485, P1835 and P1884.

The Group completed an IPO on the AIM market on 4 February 2014.

Strategy and Focus

The Group's primary objective is to increase shareholder value through the exploration, appraisal and development of fractured basement reservoirs. The Directors' strategy to achieve this is as follows:

1)            Concentrate on basement in proven petroleum systems

To date, the Group's basement exploration approach has been to focus on areas where oil had been found in basement structures by previous operators but not progressed on the basis that the prevailing opinion at the time was that such discoveries were not commercial. Once such potential areas have been identified, the Group undertakes a high grading process involving the evaluation of existing geotechnical data to establish if, and where, suitable prospects may be present.

The Directors believe this approach serves to reduce exploration risk on basement prospects by ensuring a working hydrocarbon system is present and by having available a comprehensive geotechnical database (both seismic and well data).

2)            Regional focus on West of Shetland

Hurricane has established an attractive portfolio of exploration and appraisal projects, focused on fractured basement prospectivity West of Shetland. DECC believes that the West of Shetland/Atlantic margin contains the most significant remaining UK resources yet to be discovered, at approximately 7.9 billion boe. This prospectivity has led to the significant interest generated by the 27th Offshore Oil & Gas Licensing Round. The Directors believe that the potential scale of the recoverable resource within these fractured basement reservoirs presents the UK oil and gas industry with a significant opportunity to secure a material strategic asset.

3)            Ownership and operatorship during exploration and early stage appraisal

Hurricane has maintained 100% ownership and operatorship of all of its assets to date. The Directors believe that this puts the Company in a strong position to invite other industry participants to participate in the assets and share costs, in preparation for field development that will lead to producing assets.

4)            Maintain an influential equity position

As Hurricane progresses the Group's assets towards development it intends to seek potential partners through a farm-out or other process to assist in future development and implementation of the FDP whilst maintaining an influential equity position.

5)            Opportunities to acquire exploration licences in existing and new regions

Hurricane intends to participate in applications for new licence areas where the Group will be able to apply its technical expertise in basement reservoir evaluation to create value for its Shareholders. The Directors believe that the Group's skill set and its track record to date leave it well positioned to secure further licences in countries with low geopolitical risk.

 

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