Hurricane Energy (HUR)
Posted: November 21st, 2016, 4:32 am
I thought it wise to start a new Topic/Thread for Hurricane Energy as it is likely to be an active discussion for investors and discussion may otherwise clog up the more general Stocks I Like in O&G..
Hurricane Energy plc (“Hurricane”)
UK exploration has concentrated on sandstone reservoirs where oil is held within porous rock. In fractured basins, oil occurs in cracks between layers of hard rock such as granite. It should be emphasised that this is not a fracking operation but drilling into existing naturally formed fractured basement rock where oil occurs in cracks between layers of hard rock such as granite. Thus, the company is the first North Sea explorer to drill and find oil in this neglected type of oil reservoir, formed 2bn years ago.
The techniques being used have been successfully used in a few other parts of the world, such ats Yemen and Vietnam but Hurricane are the only such explorer in the North Sea. It is a specialised operation. Hurricane’s strategic niche is to look for the right geological conditions in proven petroleum basins for basement reservoirs to work, particularly in areas where previous drilling results have indicated the presence of hydrocarbons in the basement but the operator, at that time, did not progress the concept further as they weres more concerned with recovering oil from the sandstone reservoirs.
Hurricane is targeting naturally fractured basement rock reservoirs in the West of Shetlands area. Hurricane has made two basement reservoir discoveries, Lancaster and Whirlwind, each estimated to contain approximately 200 million barrels of oil. The company also has approximately 440 million barrels of oil equivalent (“BOE”) of prospective resources in its portfolio of exploration opportunities. In 2014, it successfully drilled and de-risked the Lancaster well and later in the year initiated a farm-out process, seeking partners to fund the development of the asset.
Hurricane was co-founded in 2005 by Dr Robert Trice, its current CEO. It has acquired licences, in which it maintains a 100 per cent working interest. According to GeoScience, a research services firm, basement reservoirs could hold as much as 20 per cent of the world’s remaining oil and gas resources. Naturally fractured rock with high permeability allows the oil to rise and collect under a thick layer of shale rock and clay. Oil from this unconventional source has been successfully extracted in locations such as Vietnam and Yemen, but not yet in the UK. The fractures provide storage capacity and fluid pathways. Hurricane chose to concentrate on proven systems where previous operators had not progressed the discoveries, due to the view (at the time) that these were not commercial.
Hurricane listed in February 2014, placing 41.9 million shares at 43p, valuing the equity at £272 million. Oil prices, however, have fallen from US$109 at the time of IPO to $49 at the end of June 2016. This has hit the value of all oil and gas stocks, with the AIM sector index falling by 43 per cent over the year. The oil price fall resulted in a dearth of capital for new projects, and delays in farm-out discussions. Hurricane’s assets stand out due to the size of the resources. In comparison to Hurricane’s resource size, the average North Sea exploration target in 2014 was just over 30 million BOE, according to UK Oil and Gas.
The Lancaster field was first drilled by Shell in 1974. It was drilled again by Hurricane in 2009 and 2010, establishing that the reservoir contained light oil in a permeable reservoir. In 2014, the company drilled a one-kilometre horizontal appraisal well in the discovery, with results exceeding
best expectations and addressing identified risks. The key challenge overcome by Hurricane has been to map accurately the fractures to target the wells correctly and access production. The well has achieved a sustainable natural flow rate of 5,300 Stock Tank Barrels (“STB”) per day and a
flow rate using artificial lift of 9,800 STB per day, well over the 4,000 target. The flow rates achieved were constrained by the surface equipment.
In April 2016, Hurricane announced a £52 million fundraising to drill two wells in the Lancaster field over the summer of 2016. Crystal Amber Fund participated in the placing, which attracted a new cornerstone investor, Kerogen Capital, an oil specialist.
In June 2016, Hurricane announced the suspension of its farm-out discussions as it executes the drilling campaign and analyses the results. This is expected to refine the resource range estimate, which at the time was 62 to 456 million barrels of oil. The campaign will also provide a second future
production well. In July Hurricane announced the spudding of its new exploration well in the Lancaster field
In September/October 2016, Hurricane announced positive drilling results from its Lancaster well indicating contingent resources significantly higher than previous estimates of 200 million barrels, high flow rates (recorded a sustainable stable flow rate under natural conditions of 6,520 stock tank barrels of oil per day and a sustainable flow rate using an Electrical Submersible Pump (ESP) of at least 14,500 STB/d. The testing resulted in a productivity index (PI) of 147 STB/d per pound per square inch (psi). Both the flow rate using an ESP, and the natural flow rate were constrained by the test equipment and no formation water was produced during the testing operations.
A further round of funding was initiated in October 2016 that raised £70 million and up to £4.4 million Open Offer and again, Kerogen Investor and Crystal Amber subscribed for £31.63 million of the shares. Demand for the shares was very strong. A number of new institutional shareholders were added to the share register.
The funding is being used to advance the development of the Greater Lancaster Area fields.
In November 2016 the Lincoln Well was spudded and is targeting a basement prospect geologically similar to the nearby (approximately 9km) Lancaster structure. At time of writing, results are awaited.
Also in November 2016 Hurricane was awarded the P2308 licence ("Halifax"). Hurricane are hoping this area (some 30km from Lancaster) is analogous to Lancaster. If successful, this would establish the true extent of the Greater Lancaster Area and would lead to being a world-class asset of national importance to the UK.
Carcosa
Hurricane Energy plc (“Hurricane”)
UK exploration has concentrated on sandstone reservoirs where oil is held within porous rock. In fractured basins, oil occurs in cracks between layers of hard rock such as granite. It should be emphasised that this is not a fracking operation but drilling into existing naturally formed fractured basement rock where oil occurs in cracks between layers of hard rock such as granite. Thus, the company is the first North Sea explorer to drill and find oil in this neglected type of oil reservoir, formed 2bn years ago.
The techniques being used have been successfully used in a few other parts of the world, such ats Yemen and Vietnam but Hurricane are the only such explorer in the North Sea. It is a specialised operation. Hurricane’s strategic niche is to look for the right geological conditions in proven petroleum basins for basement reservoirs to work, particularly in areas where previous drilling results have indicated the presence of hydrocarbons in the basement but the operator, at that time, did not progress the concept further as they weres more concerned with recovering oil from the sandstone reservoirs.
Hurricane is targeting naturally fractured basement rock reservoirs in the West of Shetlands area. Hurricane has made two basement reservoir discoveries, Lancaster and Whirlwind, each estimated to contain approximately 200 million barrels of oil. The company also has approximately 440 million barrels of oil equivalent (“BOE”) of prospective resources in its portfolio of exploration opportunities. In 2014, it successfully drilled and de-risked the Lancaster well and later in the year initiated a farm-out process, seeking partners to fund the development of the asset.
Hurricane was co-founded in 2005 by Dr Robert Trice, its current CEO. It has acquired licences, in which it maintains a 100 per cent working interest. According to GeoScience, a research services firm, basement reservoirs could hold as much as 20 per cent of the world’s remaining oil and gas resources. Naturally fractured rock with high permeability allows the oil to rise and collect under a thick layer of shale rock and clay. Oil from this unconventional source has been successfully extracted in locations such as Vietnam and Yemen, but not yet in the UK. The fractures provide storage capacity and fluid pathways. Hurricane chose to concentrate on proven systems where previous operators had not progressed the discoveries, due to the view (at the time) that these were not commercial.
Hurricane listed in February 2014, placing 41.9 million shares at 43p, valuing the equity at £272 million. Oil prices, however, have fallen from US$109 at the time of IPO to $49 at the end of June 2016. This has hit the value of all oil and gas stocks, with the AIM sector index falling by 43 per cent over the year. The oil price fall resulted in a dearth of capital for new projects, and delays in farm-out discussions. Hurricane’s assets stand out due to the size of the resources. In comparison to Hurricane’s resource size, the average North Sea exploration target in 2014 was just over 30 million BOE, according to UK Oil and Gas.
The Lancaster field was first drilled by Shell in 1974. It was drilled again by Hurricane in 2009 and 2010, establishing that the reservoir contained light oil in a permeable reservoir. In 2014, the company drilled a one-kilometre horizontal appraisal well in the discovery, with results exceeding
best expectations and addressing identified risks. The key challenge overcome by Hurricane has been to map accurately the fractures to target the wells correctly and access production. The well has achieved a sustainable natural flow rate of 5,300 Stock Tank Barrels (“STB”) per day and a
flow rate using artificial lift of 9,800 STB per day, well over the 4,000 target. The flow rates achieved were constrained by the surface equipment.
In April 2016, Hurricane announced a £52 million fundraising to drill two wells in the Lancaster field over the summer of 2016. Crystal Amber Fund participated in the placing, which attracted a new cornerstone investor, Kerogen Capital, an oil specialist.
In June 2016, Hurricane announced the suspension of its farm-out discussions as it executes the drilling campaign and analyses the results. This is expected to refine the resource range estimate, which at the time was 62 to 456 million barrels of oil. The campaign will also provide a second future
production well. In July Hurricane announced the spudding of its new exploration well in the Lancaster field
In September/October 2016, Hurricane announced positive drilling results from its Lancaster well indicating contingent resources significantly higher than previous estimates of 200 million barrels, high flow rates (recorded a sustainable stable flow rate under natural conditions of 6,520 stock tank barrels of oil per day and a sustainable flow rate using an Electrical Submersible Pump (ESP) of at least 14,500 STB/d. The testing resulted in a productivity index (PI) of 147 STB/d per pound per square inch (psi). Both the flow rate using an ESP, and the natural flow rate were constrained by the test equipment and no formation water was produced during the testing operations.
A further round of funding was initiated in October 2016 that raised £70 million and up to £4.4 million Open Offer and again, Kerogen Investor and Crystal Amber subscribed for £31.63 million of the shares. Demand for the shares was very strong. A number of new institutional shareholders were added to the share register.
The funding is being used to advance the development of the Greater Lancaster Area fields.
In November 2016 the Lincoln Well was spudded and is targeting a basement prospect geologically similar to the nearby (approximately 9km) Lancaster structure. At time of writing, results are awaited.
Also in November 2016 Hurricane was awarded the P2308 licence ("Halifax"). Hurricane are hoping this area (some 30km from Lancaster) is analogous to Lancaster. If successful, this would establish the true extent of the Greater Lancaster Area and would lead to being a world-class asset of national importance to the UK.
Carcosa