WEST of Shetland-focused Hurricane Energy has seen its shares surge around 20 per cent after the company hailed a strong production performance by a giant field it developed, which has stoked huge interest in the area.

Hurricane said it has been achieving "world class productivity" rates from wells on the Lancaster field which it brought into production in June.

Read more: Giant West of Shetland field start up provides vindication for oil pioneer

The “highly encouraging” initial results from Lancaster have led Hurricane to increase its production estimates for next year.

The performance of Lancaster is likely to increase confidence in the potential of a find that is reckoned to contain more than 500 million barrels.

It could help generate renewed excitement about the West of Shetland area, in which Hurricane has conducted a pioneering exploration drive.

Hurricane’s success with the drill bit has encouraged other firms to explore West of Shetland. There has been relatively limited activity in the area compared with parts of the North Sea closer to the Scottish mainland.

Hopes there could be a boom in the area were dented last month after Hurricane said a well on the Warwick prospect had failed to flow oil at commercial quantities, sending its shares plunging.

Read more: Shetland oil well setback dents hopes of boom in area

However, following yesterday’s update Hurricane shares have recovered the ground lost last month.

After analysing the results of the well, Hurricane is confident there is lots to go for in the Greater Warwick Area.

“We are encouraged by the Warwick Deep well,” said chief executive Robert Trice. He added: “Hurricane’s assessment of data acquired during drilling and testing indicates that the well encountered a significant oil column on the Warwick structure.”

Mr Trice noted that Hurricane is about to start drilling a well to appraise the Lincoln find it made in 2016.

The Warwick and Lincoln drilling forms part of a three-well programme that will be funded by Spirit Energy. It bought into Hurricane’s acreage last year in a deal that reflected growing industry in Shetland.

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Spirit, which is part-owned by Centrica, has said the deal with Hurricane allowed it to buy in to one of the last known world-class oil development opportunities in the UK.

Mr Trice was pleased the deal allowed Hurricane to work on the Greater Warwick area without diverting resources from Lancaster.

His hopes that an early production system on Lancaster could pave the way to a much bigger development have been boosted by the initial production performance.

In an operations update Aim-listed Hurricane noted: ”From 2020, target production guidance envelope is increased from 17,000 bopd (barrels of oil per day), which remains the base case, to an upper target of 20,000 bopd.”

The company said it expects to generate $60 million cash from Lancaster this year based on a $60 per barrel oil price, and up to $240m next year.

Brent crude sold for around $67.20 yesterday afternoon.

Hurricane said it expects production costs on Hurricane to average less than $20/bbl from next year.

The guidance for 2019 is unchanged, with an average 9,000 bopd expected in the third quarter and 13,000 bopd in the final three months.

Hurricane expects to start production from the Greater Warwick Area by the end of the first quarter of 2021.

Shares in the firm closed up 9.22p at 53.6p.