SHARES in Hurricane Energy have surged 55 per cent after the company announced drilling results which highlighted the commercial potential of a giant find West of Shetland.
Surrey-based Hurricane said the appraisal well drilled on the Lancaster find indicated that it could contain significantly more than the initial estimate of 200 million barrels oil.
The well flowed good quality oil at high rates boosting hopes the find could generate the kind of returns that would justify making the huge investment required to bring it onstream.
The results could generate excitement in Scotland amid hopes there could be lots to go for off Shetland. The area is relatively underexplored compared with parts of the North Sea closer to the UK mainland.
Hurricane has focused attention on a basement of granite deep beneath the seabed which it reckons is a significant untapped resource.
The rock lies below the sandstone reservoirs that have formed the basis for the majority of North Sea exploration.
Hurricane expects to be able to produce from such basement reservoirs by tapping into natural fractures in the rock through which oil could flow.
Small independents such as Hurricane have faced challenges trying to sustain exploration activity amid the crude price slump. This has made it harder for firms to raise funding from big corporations and investors.
However, Hurricane won £44m investment from the Kerogen private equity operation in April. The deal showed some financiers see opportunities to buy into North Sea assets at what they regard as attractive prices.
Shares in Hurricane Energy closed up 13.5p at 38p yesterday. Kerogen provided funding at 15p per share.
Hurricane’s chief executive Robert Trice said the result of the well “materially de-risks Hurricane's plans for a future Lancaster field development and further underlines the potential of the fractured basement West of Shetland".
The well flowed 11,000 barrels oil daily from a 620 metre column. Hurricane made the Lancaster find in 2009. It plans to drill a second appraisal well in coming weeks.
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