Hurricane Energy (HUR)

[dspp]

TANKER UPLIFTS - draft listing, note HUR's oil sales are as of date of lift, not date of offload at a refinery

#0, 11 May 2019, real first oil into AM FPSO
#00, 4 June 2019 (first oil per RNS, i.e. simultaneous flow from both wells for 72-hours as a contractual definition)
#1, approx 18 June 2019, 350,000 bbls = approx 39 days open-up to lift, so approx 9k bopd [edit : AIS draft increase from 9.2m to 11m, though we do not know how much ballast compensation is in play]
#2, approx 21 July 2019, 450,000 bbls = approx 32 days lift-to-lift, so approx 14k bopd
#3, approx 17 Aug 2019 ??? [edit ? 45,000 tons = approx 340,000 bbls per latest info, tbd]

This is a draft list of these dates & volumes. Please feel free to correct. For that matter if any of you can give me the m3 numbers that Amaja found that would be appreciated as I do not have the heart to wade through everything to find them. I may have tanker lift dates slightly wrong so feel free to correct me if so.

Volume data without pressure data is of limited value mind you.

regards, dspp

[Nimrod103]

Volume data without pressure data is of limited value mind you.

regards, dspp

I believe pressure data in such a fractured reservoir (assuming good aquifer support) will be meaningless. The important piece of info for determining reserves is water cut.

If there is very limited aquifer support, gas cut might give some clues.

[PeterGray]

I believe pressure data in such a fractured reservoir (assuming good aquifer support) will be meaningless. The important piece of info for determining reserves is water cut.

That is not the company's view. There is a lot of discussion of pressure date in the recent Capital Markets Day presentation, which is well worth reading and listening to.

https://www.hurricaneenergy.com/investors/presentations

[planetgong]

Hi dspp,
Amaja's posts on lse give the following numbers only:
19/6 47389 tons =356429b
22/7 56000 tons =455000b
23/7 450000b
There seems to be a discrepancy as the June load is 7.5b per ton and July is 8.1 b/t
In the July Post there is a comment that it is a new sort of crude that will need analysis but that makes little sense to me unless the second load is shipped with water which seems most unlikely.

Separately I'm feeling apprehensive ahead of LC so fabricated some numbers for myself:
Poor result under 500b 10% chance of 15p drop
So so result around 1000bpd 30% chance of 5p drop
Good result around 2000bpd 30% chance say 8p rise
Very good 2500 or more 30% chance say 15p rise
Giving a mean of about +4p or around 10% sp rise.
Not meant to be taken seriously but any thoughts?
Cheerio pg.

[dspp]

Hi dspp,
Amaja's posts on lse give the following numbers only:
19/6 47389 tons =356429b
22/7 56000 tons =455000b
23/7 450000b
There seems to be a discrepancy as the June load is 7.5b per ton and July is 8.1 b/t
In the July Post there is a comment that it is a new sort of crude that will need analysis but that makes little sense to me unless the second load is shipped with water which seems most unlikely.

Separately I'm feeling apprehensive ahead of LC so fabricated some numbers for myself:
Poor result under 500b 10% chance of 15p drop
So so result around 1000bpd 30% chance of 5p drop
Good result around 2000bpd 30% chance say 8p rise
Very good 2500 or more 30% chance say 15p rise
Giving a mean of about +4p or around 10% sp rise.
Not meant to be taken seriously but any thoughts?
Cheerio pg.

Thank you for those, I'll update my ready-reckoner list when Amaja ferrets the size of this offload out of the Rotterdam port authorities.

Wrt to the "new sort of crude" comment that was a pricing matter. It will earn an additional risk discount until the refineries are comfortable with how it processes. After that the risk discount will be eliminated and it will be on a fixed discount (or uplift) to Brent.

Wrt to the b/t conversion this is where I am most flummoxed as when I go to the API definitions I cannot make Amaja's numbers add up. So that suggests to me that someone somewhere is giving rounded numbers on one hand, and precise numbers on the other, and that would account for the discrepancy. But I don't know which is which, and for my purposes at this stage round numbers are fine.

Wrt to the price/value disconnect that is unknowable to me. I can see a whole set of factors in play but I'm not clever enough to know if I have them all, and to sort them even into a list of importance, and to know when/if there will be a narrowing. In this I am definitely a bear of little brain. So your list is as good as anyone's for the LC result !

Regards, dspp

[dspp]

TANKER UPLIFTS - updated listing, note HUR's oil sales are as of date of lift, not date of offload at a refinery. It is 38 API (*2).

#0, 11 May 2019, real first oil into AM FPSO
#00, 4 June 2019 (first oil per RNS, i.e. simultaneous flow from both wells for 72-hours iaw contractual definition)
#1, approx 18 June 2019, 47,389 tons =356,429 bbls @ approx 39 days open-up to lift, so approx 9k bopd
#2, approx 21 July 2019, 56,000 tons = 455,000 bbls @ approx 32 days lift-to-lift, so approx 14k bopd
#3, approx 17 Aug 2019, 60,595 tons = 456,280 bbls @ approx 28 days lift-to-lift, so approx 16k bopd (*1)


*1: AIS draft increase from 9.2m unloaded to 11m loaded. Actual draft on Rotterdam departure after unload was fwd 7.20 meters and aft 9.20 (which is the AIS unloaded max draft state), though we do not know how much ballast compensation is in play. Actual load of 60.5kt corresponds to avge draft per londoner7 tanker calcs. However if trim constant then max unloaded to max loaded is a good indication. IF trim constant.
*2 : for 38 API I get 56,000mt = 421,894 bbls, i.e. 7.53 bbls/mt, see https://en.wikipedia.org/wiki/API_gravity however there are a variety of different conversions being used so there is a discrepancy somewhere.

(as always thanks to Amaja, divecentre, laserdisc, planetgong, londoner7, etc)

regards, dspp

[edit: updated 16:50 on 19 08 19 & at 11:25 on 22 08 19 to include corrected info from Amaja re #3, using my Mod special powers]

[JoyofBrex8889]

The updated figure seems very promising indeed. I am convinced that the Lancaster wells are doing the business better than could have been hoped for.

Hopefully at some stage we will get a further release of data from the company to confirm this.

I am feeling a little sore at the drop sub 40p, but excited that I can add at this price. At todays level, with production operations going rather well, the risk/reward ratio is very favourable indeed.

[Carcosa]

Lancaster EPS

Hurricane has mentioned numerous times that 6-12 months of stable production is required to ascertain which of their theoretical production scenarios (Low/Base/High) will be matched in practice. In their discussions they have indicated various operational tests to be conducted many of which change the flow rates from both wells.

What this meant in practice is that stable production is not planned to start until after about six months from first oil (as also indicated in the chart and my annotation) and needs 2 x 10,000 boepd (17,000 boepd at 85% uptime).



That means at we would expect an announcement regarding 'true' well performance would be between Q3 2020 and Q1 2021. However given the strong start up performance that might be reduced by a couple of months(?)

[wanderer101]

And here are the official numbers

https://www.investegate.co.uk/hurricane ... 00068019K/

The update reads very positively:

· Lancaster EPS system availability and production since First Oil above guidance

· Average production rate of c. 14,400 barrels of oil per day ("bopd") from First Oil to latest lifting on 17 August

· 1.2 million barrels of crude oil sold to date

· Lincoln Crestal well now being prepared for drill stem testing

[PeterGray]

Though it also points out, as should have been expected, that assumptions that production will continue at these or higher levels for the next 6 months are misplaced. Production is likely to fall over that period as they will be beginning a delyed set of shut ins and pressure tests, now whatever undisclosed issue they've had with one of the flow lines is resolved.

[JoyofBrex8889]

We are by all accounts getting to the business end of the Lincoln Crestal drill now: I hope that we get news of a flare and a subsequently an RNS beginning of next week. I am concerned to get on with the WC drill. Good news from Warwick would be welcome to help reassure following the dissappointment of WD.

Good luck all.

[Carcosa]

Anyone have an idea how long the DST will take, once commenced?

For Well 205/21a-7 (Lancaster inclined appraisal well) it was a 15 day job.

[PeterGray]

I've no better idea than that slide gives, or what you could guess. It would be no surprise if HUR didn't announce till the testing was complete - that would be normal, so it could easily be a couple of weeks.

However, there seem to be a lot of people hoping they, or someone else will spot a flare. I guess if that happened some indication might escape more quickly, but I'd be wary of attaching much significance to such rumours - it will be hard to know if they are correct, and it will be even harder to judge what they mean. As ever patience is called for!

[dspp]

Flare sighted from Solan, looking in direction of LC, so DST appears underway:

https://www.icloud.com/photos/#029nVXPo ... BJ6GfgArRA

regards, dspp

[dspp]

https://www.hurricaneenergy.com/investors

"9 September 2019 Hurricane Energy plc 'Lincoln Crestal' 205/26b-14 Well Update

Hurricane Energy plc, the UK based oil and gas company focused on hydrocarbon resources in naturally fractured basement reservoirs, provides an update in relation to the 205/26b-14 well ("Lincoln Crestal").

The Company notes speculation regarding the flare on the Transocean Leader drilling rig. The Company confirms that a drill stem test on the Lincoln Crestal well has produced oil to surface, resulting in a flare. At 13:10 on Sunday 8 September 2019, the well was shut-in to enable a planned pressure build-up test.

The Company will update the market on initial results of the well, including flow rates and oil type, following completion of the ongoing testing phase."

[youfoolishboy]

RNS out this morning looks like its a winner....
https://ir.q4europe.com/Solutions/Hurri ... d=14441717
Hurricane Energy plc, the UK based oil and gas company focused on hydrocarbon resources in naturally fractured basement reservoirs, is pleased to report the results of testing of the 205/26b-14 well ("Lincoln Crestal").
Highlights
-- Maximum stable flow rate of 9,800 stb/d on ESPs
-- Lincoln confirmed to contain light, 43deg API oil
-- No formation water produced
-- Well now planned to be suspended as a future producer
Testing of the Lincoln Crestal well recorded a maximum stable flowrate of 9,800 stock tank barrels of oil per day ("stb/d") with the use of electrical submersible pumps ("ESPs"). The well flowed at an average rate of 4,682 stb/d under natural conditions. No formation water was produced.
Lincoln Crestal is the second well in a three-well programme on the Greater Warwick Area ("GWA"). The well was spudded on 12 July 2019 and was drilled to a total depth of 1,780 m TVDSS. It included a 720 m horizontal section of fractured basement reservoir.
The well will now be suspended, subject to regulatory approval, with long term gauges installed to test interference with future GWA wells. It is then planned to be tied-back to the Aoka Mizu FPSO during 2020, subject to further technical evaluations, regulatory consent and final investment decision by the joint venture. Production from the tie-back would generate reservoir data to be used in planning future phases of development.
The Transocean Leader semi-submersible rig will now move to the location for the third well in the 2019 GWA drilling programme, 204/30b-A 'Warwick West'.
Dr Robert Trice, Chief Executive of Hurricane, commented:
"We are delighted with the results of the Lincoln Crestal well. We have confirmed the presence of light oil which can be produced at commercial rates. The Lincoln Crestal well is now planned to be tied back to the Aoka Mizu FPSO next year. This would make Lincoln the second producing basement field in the UK.
"Based on the result of the 2016 Lincoln well, RPS Energy assigned 2C contingent resources of 604 million barrels of oil equivalent to Lincoln. This successful result brings us closer to monetising this huge resource."

[dspp]

Hmmmm.......

Lancaster is 38 API

This RNS has Lincoln at 43 API

It will be interesting to see the GOR numbers when they release them. Is this a measurement uncertainty in the well test results, or is it an indication that there is a slightly different set of fluids in LinWar than LanHal. If so that is another confirmation that these are two fully independent fields (not that that was in any real doubt).

Interesting.

Anyway an excellent result.

It will also be good to know the PI when they feel able to release it.

regards, dspp

[youfoolishboy]

Not only 2 separate fields but move valuable oil in the second one! All good so far.

[Carcosa]

Maintaining the tradition on this board I provide a copy of CRS's latest report concerning Hurricane which, as usual, provides a good summary of where we are:
===============

Hurricane is an oil exploration company targeting naturally fractured basement reservoirs in the West of Shetland. It controls 2.6 billion Barrels of Oil Equivalent (“BOE”) certified resources and reserves. The Fund’s previous annual reports include additional background information on this investment.

This was a year of great achievement for Hurricane. In September, it agreed a farm-in deal with Spirit Energy over 50% of its Greater Warwick acreage. The company’s first farm-in deal with an industry partner supports the case for basement reservoirs in the UK continental shelf. The deal also re-started Hurricane’s exploration operations with an intensive three-year appraisal campaign. As Warwick had only been drilled once by Hurricane in 2016, it was behind Lancaster in the appraisal and development process. Spirit’s commitment of $387 million should accelerate this. As such, we believe that the deal with Spirit is transformational for Hurricane.

The Greater Warwick exploration campaign started in the spring of 2019 with a three-well programme, fully funded by Spirit. The first well was the riskiest due to its depth, and unfortunately results were disappointing. Oil was discovered but it did not flow at commercial rates and so the well was abandoned. The campaign has continued with the Lincoln Crestal well. In parallel, long lead items have been ordered so that in 2020 one of the wells drilled in 2019 will be tied back to the Floating Production and Storage vessel for production appraisal. As with the Lancaster Early Production System (“EPS”), this step will enable collection of additional reservoir data ahead of an initial full field development of 500 million barrels of reserves. This approach is expected to leverage Hurricane’s Lancaster infrastructure, and generate incremental revenues to the company at little additional cost.

In June 2019, Hurricane announced first oil from its EPS. This has been delivered on time and on budget albeit with a protracted final hook-up phase. In July 2019, following the period end, the company advised that the EPS was performing above expectations during the first month of operation and increased its production forecast. The two horizontal wells are producing 20k BOE per day under natural flow conditions, that is, without electrical pumps. Whilst it is too early to establish the asset’s long-term potential, initial production data supports the company’s reservoir model. Hurricane retains 100% ownership of this asset that is expected to generate US$200 million per annum at US$60/BOE. This cash flow underpins Hurricane’s options to appraise further its Great Lancaster asset either independently or in partnership.

The Fund is a longstanding supporter of Hurricane, having funded its exploration efforts since 2013 and its production strategy since 2016, when the EPS’s long lead items were first purchased. Over the last year, Hurricane has developed in size and complexity and continued to perform well. Over the period, the Fund reduced its opening position by 22% as it took profits of £17.9 million and exercised its warrants over 23.3 million shares. Despite banking total profits of £41.8 million on Hurricane, the year-end carrying value includes an unrealised profit of £28.0 million.

[dspp]

New paper out, link spotted courtesy Carcosa:

https://www.hurricaneenergy.com/downloa ... ce/480/258

An integrated approach for fractured basement characterization: the Lancaster Field, a case study in the UK
Daniel A. Bonter* & Robert Trice

Abstract: To date, naturally fractured crystalline basement reservoirs (‘basement’) in the UK Continental Shelf (UKCS) have
been underexplored and underexploited. Over the last 12 years, Hurricane Energy have explored and evaluated the potential of
the basement play,West of Shetland. Data acquired by Hurricane Energy through drilling and drill stem testing of five wells on
the Lancaster Field has provided sufficient insight into the reservoir properties of the basement reservoir that Hurricane is now
progressing Lancaster towards the first UK basement full-field development. The development is designed to be phased with
production from the first phase achieved in 2019. Fractured basement reservoirs require a specific approach when acquiring and
interpreting formation and well test data. A multi-disciplined team ethic, carefully integrating these data while avoiding a siloed
approach, has proved essential to understanding the behaviour of the connected fracture network. Hurricane incorporates
drilling and mudlogging data, high-resolution gas chromatography, logging while drilling (LWD) and wireline logs, drill stem
test (DST) and production logging tool (PLT) data to analyse and model the reservoir. It is the combination of these disparate
datasets which is key to Hurricane’s analysis and has led to the technical de-risking that has underpinned the final investment
decisions leading to the first phase of the Lancaster development.
Received 24 October 2018; revised 18 July 2019; accepted 26 July 2019

Note July revision dates ........

dspp