Hurricane Energy is looking to raise US$86 million (£70 million) of new capital to fund its Lancaster development, West of Shetland, offshore the UK.
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Image from Hurricane Energy. |
The funds will secure the early production system (EPS) development timeline, and the drilling of two wells.
According to Hurricane, net proceeds will primarily be used to advance the development of the Greater Lancaster area fields by funding the front-end engineering and design (FEED), in addition to certain other engineering studies for the EPS phase of Lancaster; secure the development timetable for the EPS by acquiring the subsea equipment, buoy, mooring and control system long lead items; and further delineate the Greater Lancaster Area by drilling an exploration well on Lincoln and an exploration well on Warwick or another similarly risked Rona Ridge prospect with the potential for up to some 500 MMbbl of unrisked prospective resources across the Lincoln and Warwick prospects (assuming analogous to Lancaster).
Hurricane is also proposing to make an open offer to all qualifying shareholders to raise up to $5.4 million (£4.4 million)
Existing shareholders, including Kerogen Investor and Crystal Amber, have subscribed for shares of about $39 million (£31.63 million).
“This looks like a proper raise for a company with a big discovery, well oversubscribed with a number of new institutions on board aiming to kick in with the Lancaster EPS and other drilling,” Malcolm Graham-Wood, analyst and commentator of Malcy’s Blog said.“That looks like being on Lincoln and maybe Warwick or similar and will take advantage of low industry costs.”
Hurricane expects to begin drilling in November, in order to drill back-to-back wells using the Transocean Spitsbergen vessel, which was used to drill the previous Lancaster wells.
The company will also restart farmout discussions later this year, following the completion of technical analysis of Lancaster 7 wells. Hurricane said it “is in a stronger negotiating position as a result of recent operational delivery, enhanced resources expectation for the Greater Lancaster Area and strengthened financial position.”
The final investment decision on the EPS phase of development in expected to be reached in 1H 2017, with first oil targeted for 1H 2019.
The placing and open offer are subject to shareholder approval on 7 November.
Earlier this week, Hurricane reported a sustainable flow rate using an electrical submersible pump of 14,500 stock tank b/d with no produced formation water, from a horizontal side-track well at its Lancaster discovery.
Lancaster is on the Rona Ridge, one of four areas defined by the pilot well as having a proven fractured basement play. It is a larger basement structure within the P1368 central license block. The crest of the field is about 1000m true vertical depth subsea (TVDSS).
At the crest, a four-way dip structural closure exists to create a conventional trapping mechanism down to the 1380m TVDSS contour, Hurricane said. Oil has been discovered and produced from within this four-way dip closure. All four wells on the field have discovered oil within the structural closure.
Hurricane plans to develop Lancaster in phases, enabling data acquisition to optimize the development of further phases.
Read more:
Hurricane flows at Lancaster side-track
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