Hurricane Energy has landed £52million in investment to drill two wells on its Lancaster field this summer.
The West of Shetland field is one of the largest yet-to-be-developed fields in the UKCS with a contingent resource of up to 450million. Hurricane is targeting first oil in 2019.
$44million of the funds comes from oil and gas PE fund manager Kerogen and £8million from existing holders, including £7million from Crystal Amber.
Chief executive Robert Trice said: “We are delighted with the investment by Kerogen and certain existing Shareholders which places Hurricane in a position to drill, test and evaluate two new wells on Lancaster this year. The Pilot Well is designed to determine our Lancaster Contingent Resource ranges ahead of any field development decision. The Horizontal Sidetrack is intended to establish flow rates that are at least similar to our 2014 horizontal well productivity as well as providing the remaining well stock for the EPS phase of development.
“The successful completion of these two operations will enable us to advance the development of one of the UK’s largest yet to be developed fields. To be able to progress to this point, whilst retaining a 100% interest in all our assets, is a tremendous accomplishment and can only aid our continuing farm-out discussions which are progressing well.
“We look forward to the forthcoming operations using Transocean’s Spitsbergen rig. Both Hurricane’s and Transocean’s pragmatic approach to commercial models and the contractual negotiations which have developed between us are unprecedented. This is a breath of fresh air in today’s tough industry environment, making projects viable with valuable upside for both parties. We have created a great partnership and we look forward to a successful continuing relationship.”
The summer campaign will complete the number of wells needed for the early production system phase of the development and Hurricane still controls 100% of the asset.
Jason Cheng, managing partner of Kerogen Capital, added: “Our investment in Hurricane underlines our confidence in the long-term potential of the North Sea and our continued commitment to the oil and gas sector in the current market environment. Hurricane represents an outstanding opportunity for Kerogen to participate in the exciting fractured basement play by gaining exposure to the future development of the Lancaster oil field and prospective adjacent areas. We look forward to partnering with the Hurricane team in the critical next stage of the Company’s development.”
Transocean’s Spitsbergen will carryout Lancaster well operations this summer.
The investment confirmation comes on the same day Hurricane released its preliminary results.
The firm’s loss after tax £5.4million – a 37% reduction on last year’s £8.6million.
Group cash equivalents totaled £9.9million, including £2.3million held in escrow.
Its loss after tax reduced by 30% to £5.5million.