Hurricane Energy CEO resigns. Lancaster production increased

The chief executive officer (CEO) and director of London-listed oil explorer Hurricane Energy has decided to resign from the company.

Hurricane said on Monday that its director and CEO Robert Trice resigned from the company by mutual agreement with the board of directors. He will remain available to assist during a transition period of six months. 

Beverley Smith has been appointed as the interim CEO. She had a successful 30-year career with BG Group and has been a non-executive director of the company since December 2019.

Also, Richard Chaffe – the acting CFO since February 2020 – has taken up the permanent CFO role and an executive director position within the company. Chaffe joined Hurricane in 2016 as the head of finance.

Roy Kelly, the Kerogen-nominated non-executive director since 2016, stepped down from the board and was replaced with immediate effect by Kerogen Capital Advisory Board member Alan Parsley.

Parsley is a geologist with over 50 years of experience in the oil and gas industry, primarily at Shell.

Another Kerogen-related change was Jason Cheng stepping down from his Kerogen-nominated alternate director position. Leonard Tao will continue in this role, acting as an alternate to Parsley.

A Technical Committee of the board has been established, formalising an existing arrangement where certain members of the board have provided oversight of critical technical matters and reserves and resources disclosures. David Jenkins, an independent non-executive director since 2013, will chair the committee.

An Environmental, Social, and Governance Committee of the board has also been established to oversee and report on the impacts of company operations and products.

Steven McTiernan, chairman of Hurricane, said: “The board commends Trice’s pioneering efforts to explore the viability of the unique basement oil play west of the Shetlands. His dedication over a period of 16 years has built Hurricane into a recognised UK operator today, culminating in the outstanding success of delivering first oil in May 2019.

“As we move into a phase where the focus is on enhancing production, I am very pleased that Beverley has taken on the role of interim CEO where her extensive subsurface and development experience will be of huge benefit to the company.

“In evaluating options for the forward work programme against an uncertain macroeconomic backdrop, we will prioritise early low-cost production with the capital discipline needed to achieve financial resilience“.

Hurricane also stated on Monday that well 205/21a-6 from the Lancaster Early Production System had been producing on its own since 17 May 2020 at a steady rate of 10,300 bopd with a stable water cut of approximately eight per cent.

To remind, Hurricane shut-in one of two wells at the Lancaster EPS last month due to interference between the two producing wells. As a result, Hurricane has suspended its full-year production guidance.

Namely, the shut-in of the well will result in a period of production substantially below forward guidance of net 18,000 bopd and Hurricane, therefore, suspended its previous full-year guidance of net 17,000 bopd.

The work of both wells simultaneously was part of ongoing testing to determine the sustainability of combined production rates up to gross 20,000 bopd.

In its Monday statement, Hurricane said that the testing programme for the remaining producing well has been going on as planned.

The choke size was increased on 5 June 2020 resulting in a production increase to around 12,000 bopd. The well will continue to be monitored, with further incremental increases in production possible depending on observed performance to determine its optimal sustainable rate.

The Lancaster EPS is the first phase of development of the Lancaster field, located in the West of Shetland area, and consists of two wells tied back to the Aoka Mizu FPSO. The first oil was achieved in June 2019.

Given the challenges experienced in sustaining the target plateau production rate of 18,000 bopd net from the existing two well configuration on natural flow, the Technical Committee will conduct a review of all available information, including recent dynamic performance data, and will re-examine the full range of possible geological and reservoir models.

Any revised interpretations will be factored into an updated competent person’s report, which Hurricane anticipates to be released no later than the end of the first quarter of 2021.

Given the difficult macroeconomic backdrop and the need to strengthen the company’s balance sheet, the board is keenly focused on the need to increase production, whilst also keeping capital expenditure to a minimum.

Principal among the near-term tasks of the interim CEO will be to propose a revised forward activity programme in support of those objectives.

According to Hurricane, the forward activity programme will be based on a prudent interpretation of field performance to date, including, for conservatism, the possibility of a shallower oil-water contact.