Centrica-backed Spirit to pump cash into Hurricane Energy North Sea field

● Agreement seen as further boost to exploration activity to west of Shetland

Spirit Energy, backed by Scottish Gas-owner Centrica, is to invest almost $390 million (£303m) in exchange for 50 per cent of Hurricane Energy’s Greater Warwick Area project in the North Sea.

The deal, which aims to confirm hundreds of millions of barrels of reserves in the area off the Shetland Islands, would be a major boost for the North Sea basin.

Hurricane and Spirit, which will operate the fields, target first oil from the Greater Warwick Area project by 2020 and a final investment decision for the first phase of full field development by 2021.

The west of Shetland region of the North Sea has attracted growing interest in recent years as fewer discoveries are made in the main UK portion of the basin to the north east of Aberdeen. Hurricane special- ises in recovering oil from fractures in hard and brittle rock such as granite known as fractured basement reservoirs.

Spirit said it would fund a campaign to drill three wells around 100 kilometres west of Shetland, to further prove up the potential of an area that holds an estimated two billion barrels of oil equivalent (boe) in prospective and contingent resources.

The three wells will be drilled in licences operated by Hurricane. They will target the Lincoln discovery and the Warwick exploration prospect.

Should the well campaign and further tests in the area be successful, Spirit and Hurricane aim to progress Lincoln and Warwick towards full field development.

At the development stage Spirit would become licence operator, combining Hurricane’s expertise in the west of Shetland area with Spirit’s experience of operating assets on the UK Continental Shelf, including via floating production storage and offloading vessels which may be required for the development.

Spirit boss Chris Cox said: “Appraising the Lincoln discovery and exploring for new reserves in Warwick offers a tremendous opportunity for Spirit to participate in the early phases of resource maturation in one of the last known worldclass oil development opportunities in the UK.

“We are looking forward to partnering with Hurricane Energy to progress these two west of Shetland licences.

“Since launching Spirit Energy less than a year ago we have set out to grow our reserves and resources and, following further exploration successes this year, farming into two exciting opportunities like Lincoln and Warwick helps cement our place as one of Europe’s leading independent oil and gas companies.”