Hurricane Energy gets 231% reserve estimate boost

Hurricane Energy’s share price rose more than ten percent on Monday after a competent person’s report boosted its oil reserves estimate by 231 percent.

Hurricane said its total 2P Reserves + 2C Contingent Resources increased by ~231% to 2.6 billion barrels of oil equivalent. The report covered Hurricane’s Rona Ridge assets in the UK North Sea excluding the company’s main asset, the Lancaster field.

The competent person’s report did not cover the Lancaster as it was covered in a CPR released in May.

According to Hurricane, the 2C contingent resources estimate for the Halifax discovery, located near the Lancaster, is 1,235 million barrels of oil equivalent, and for the Lincoln discovery, 604 million barrels of oil equivalent.

The undrilled Warwick prospect is assigned Best Case (P50) Prospective Resources of 935 million stock tank barrels of oil, with a 77% chance of being a discovery.

Whirlwind 2C Contingent Resources of 179 – 205 million barrels of oil equivalent from the November 2013 CPR are reiterated (depending on the hydrocarbon case). Strathmore Contingent Resources are also reiterated. Strathmore is a sandstone reservoir and the only non-basement discovery in Hurricane’s portfolio.

Also, Licences P.1485 and P.1835, which contain the Typhoon and Tempest prospects, have been excluded from this report. Hurrican plans to relinquish these licenses.

Lancaster on Track

Hurricane said its Lancaster Early Production System (“EPS”) is fully funded and on track for first oil in the first half of 2019. This first phase of development, which will use the Aoka Mizu FPSO, is designed to provide data to better understand the reservoir characteristics of the basement on the Rona Ridge, whilst providing the company with substantial cashflow.

“This CPR has reiterated that Hurricane’s other Rona Ridge assets have very similar properties to Lancaster and the EPS is expected to develop the understanding of these discoveries whilst providing capital for the next phase of development. The EPS has given the Company the flexibility to continue to de-risk its assets independently, until such time that it receives an offer from an industry partner that reflects appropriate value for shareholders,” Hurrican said.

Hurricane said on Monday its data room remained open for future partners and investors.

“We have been encouraged that certain potential counterparties have expressed a desire to transact across Hurricane’s entire Rona Ridge portfolio. However, given the potential capital commitments for a development of the size indicated by this resource upgrade, it is likely that potential partners will wait to see initial results from the Lancaster EPS,” the company said.

Robert Trice, Chief Executive of Hurricane, said: “We are pleased to now have independent validation of our geological model for the Rona Ridge basement play. The Lancaster EPS will go a long way, together with other appraisal work, to narrowing reservoir resource ranges on our assets on the Rona Ridge, following target first production in H1 2019. In addition to providing significant cash flow, the Company believes that a successful EPS will provide a read-across to the production potential of all our basement assets, materially de-risking Lancaster and the surrounding fields at Lincoln, Halifax, Warwick and Whirlwind.”