Hurricane Energy eyes bigger prize as countdown to first oil at field begins

● Output could be worth $200m a year ● News comes as Seagull gets green light

Hurricane Energy, the oil and gas firm behind one of the largest new developments in the North Sea, yesterday said it was about to enter an “exciting period” with the start of production set to generate funds for a wider appraisal of its interests in the area.

Thecompanyexpectstosoon start output at the Lancaster field in the West of Shetland area using an early production system (EPS) which it spent more than $205m (£157m) on developing last year.

Hurricane is planning for initial production of 17,000 barrels of oil per day which would generate more than $200m in annual operating cash flow at current oil price levels.

Chief executive Dr Robert Trice said the revenue will allow the firm to “pursue significant further appraisal and development activities” in the North Sea where its interests are centred on the Rona Ridge.

Trice’s comments came as the firm announced full-year results which highlighted the investment being made in the Lancaster field, which could hold more than 500 million barrels of oil.

Development expenditure on the Lancaster EPS was $205.3m and losses after tax rose to $60.9m from $7m, the majority of which was related to a bond issue.

During the year the company also agreed a farm-in with Spirit Energy on its Greater Warwickarea(gwa)interests which Hurricane described as a transformational deal. “The Spirit farm-in has significantly accelerated activity on the GWA, providing up to $387m for a phased work programme. This includes the drilling of three wells in 2019 with minimal net cost to Hurricane,” said Trice.

“The transaction brings forward a potential final investment decision on a full field development on these assets by a number of years.

“With first oil from the Lancaster EPS and a three well drilling programme on the GLA, we look forward to another exciting period for Hurricane in 2019 as we advance our strategy of derisking and monetising the substantial resources in our Rona Ridge portfolio.”

● The development of the Seagull oilfield in the North Sea, expected to produce some 50,000 barrels of oil equivalent a day over ten years, was yesterday given the green light by Aberdeen-based Neptune Energy and its partners.

Mike Tholen of Oil & Gas UK said the decision to develop the project “demonstrates a growing appetite among North Sea players to establish a diversified portfolio making the most of the variety of opportunities the basin offers”.