Setback for North Sea operator

Shares in North Sea producer Hurricane Energy fell sharply yesterday on disappointing news of a setback at its flagship field.

The firm has halted production on a well at the Lancaster field in the West of Shetland area after tests resulted in interference with an existing well.

It has now halted production on that well in order to test the new one to maximum capacity and has suspended previous full-year guidance of production of 17,000 barrels a day at the site.

Chief executive Dr Robert Trice said: “The results of the recent testing of the Lancaster early production system wells at elevated combined production rates are disappointing and the degree of interference encountered is unexpected.

“Whilst the wells show high productivity individually, their proximity and associated interference behaviour requires further data acquisition before the company can be confident about optimum long-term well rates.

“This latest development reinforces that. This data acquisition process continues, and further updates will be provided once we have determined our target plateau production rate with the existing well configuration.”

In February, Hurricane announced plans to accelerate production at Lancaster by drilling a new well after deciding to abandon the Lincoln Crestal well at Greater Warwick.

It is thought the Lancaster reservoir could hold more than 500 million barrels of oil.

Last month, Hurricane stressed it was in a strong position to weather the Covid-19 impact with significant cash balances at its disposal.

It also pointed out that its low operating cash costs of $17 per barrel meant the low oil price does not pose an immediate threat to the company but does limit options for capital expenditure on additional operational phases in the North Sea.