Calendar An icon of a desk calendar. Cancel An icon of a circle with a diagonal line across. Caret An icon of a block arrow pointing to the right. Email An icon of a paper envelope. Facebook An icon of the Facebook "f" mark. Google An icon of the Google "G" mark. Linked In An icon of the Linked In "in" mark. Logout An icon representing logout. Profile An icon that resembles human head and shoulders. Telephone An icon of a traditional telephone receiver. Tick An icon of a tick mark. Is Public An icon of a human eye and eyelashes. Is Not Public An icon of a human eye and eyelashes with a diagonal line through it. Pause Icon A two-lined pause icon for stopping interactions. Quote Mark A opening quote mark. Quote Mark A closing quote mark. Arrow An icon of an arrow. Folder An icon of a paper folder. Breaking An icon of an exclamation mark on a circular background. Camera An icon of a digital camera. Caret An icon of a caret arrow. Clock An icon of a clock face. Close An icon of the an X shape. Close Icon An icon used to represent where to interact to collapse or dismiss a component Comment An icon of a speech bubble. Comments An icon of a speech bubble, denoting user comments. Ellipsis An icon of 3 horizontal dots. Envelope An icon of a paper envelope. Facebook An icon of a facebook f logo. Camera An icon of a digital camera. Home An icon of a house. Instagram An icon of the Instagram logo. LinkedIn An icon of the LinkedIn logo. Magnifying Glass An icon of a magnifying glass. Search Icon A magnifying glass icon that is used to represent the function of searching. Menu An icon of 3 horizontal lines. Hamburger Menu Icon An icon used to represent a collapsed menu. Next An icon of an arrow pointing to the right. Notice An explanation mark centred inside a circle. Previous An icon of an arrow pointing to the left. Rating An icon of a star. Tag An icon of a tag. Twitter An icon of the Twitter logo. Video Camera An icon of a video camera shape. Speech Bubble Icon A icon displaying a speech bubble WhatsApp An icon of the WhatsApp logo. Information An icon of an information logo. Plus A mathematical 'plus' symbol. Duration An icon indicating Time. Success Tick An icon of a green tick. Success Tick Timeout An icon of a greyed out success tick. Loading Spinner An icon of a loading spinner.

Hurricane and Spirit Energy amend Greater Warwick deal after plans are stalled

The Aoka Mizu FPSO, pictured before it arrived at the Dubai shipyard
The Aoka Mizu FPSO serves Hurricane Energy's Lancaster field

Hurricane Energy and Spirit Energy have gone back to the drawing board for their Greater Warwick Area (GWA) joint venture, which will see Hurricane take on additional costs.

The pair signed a deal in September 2018 for Spirit to farm-in to 50% of the West of Shetland region, with the first “phase” of work being a three-well drilling campaign, which took place last year

As a result of the need for further data and regulatory approval for its Lincoln Crestal discovery, a sanction decision has not yet been made.

Therefore “Phase 2” of the project, a tie-back of a well to the Aoka Mizu production system at its nearby Lancaster field, has not happened which has brought amendments to the deal.

The original agreement was for Spirit to pay 75% of costs for Phase 2 up to $187.5 million (£144.5m), including tie-back of the well, modifications to the FPSO and tying the Aoka Mizu to the West of Shetland Pipeline System (WOSPS).

Hurricane said it has “no current plans” on that yet, but in the event it does proceed it will now pay 100% of the costs for the WOSPS tie-in, estimated to be £48m.

Hurricane would also reimburse Spirit for gas export past costs up to January 31, 2020 of around £14m.

However, should Phase 2 later be approved, Hurricane will benefit from the original terms of the 2018 agreement, including “retrospective application of the carry in the proportions originally agreed”.

The firm said Hurricane and Spirit are “continuing their planning and negotiations” for the GWA.

The amended deal will still see work carried out on a 50:50 basis to build the equipment and materials for a single-well tieback to the FPSO, with an additional £16m net cost to Hurricane.

These will be held in storage until a sanction decision is made. Meanwhile Hurricane can elect to build out long-lead items for tying the FPSO to the WOSP system on a sole basis at a cost of around £21.5m.

Chief executive Robert Trice said: “These amendments to our arrangements with Spirit give us greater optionality relating to gas export, whilst preserving the carry value of the Spirit farm-in in the event that the GWA joint venture partners proceed with a GWA tie-back in the future.

“In addition, the Lancaster EPS is currently producing at 20,000 barrels of oil per day and I look forward to providing an update at the Capital Markets Day on 25 March 2020.”

Last month the pair confirmed that the tie-back of the Lincoln Crestal would not go ahead this year as originally planned.

 

Recommended for you

More from Energy Voice

Latest Posts