West of Shetland oil pioneer’s shares plunge despite news of fresh discovery

Hurricane’s chief executive Robert Trice said the firm was pleased to have made another find with the Warwick West well drilled around 70 miles West of Shetland.

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He noted the well confirmed the presence of light mobile oil, which is relatively easy to produce and refine.

The find is the fifth made by Hurricane in a run of success which has helped encourage hopes the Shetland area could sustain another era of activity in the wider North Sea.

Hurricane started production from the giant Lancaster find in June.

The company has focused on an under-explored area of granite, the potential of which was spotted by Mr Trice.

The scale of interest in Hurricane’s achievement was made clear last year when the Spirit Energy business owned by giant utility Centrica bought into its acreage and agreed to fund an $180m drilling campaign.

The Warwick West well was the last in a three well programme funded by Spirit, which said the results of the campaign had been encouraging.

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This included a well to appraise the Lincoln find made by Hurricane, which produced strong results.

The Warwick West well result provided compensation for the disappointment suffered with the Warwick Deep well in July. In a rare reverse for Hurricane this did not flow at commercial rates.

The fall in Hurricane’s share price yesterday probably reflected the fact the flow rates achieved at Warwick West were relatively modest by the standards set by Hurricane.

Warwick West flowed at 1,300 barrels oil per day.

A well to appraise the Lincoln find drilled in the summer flowed at up to 9,800 bopd.

Hurricane yesterday reaffirmed guidance that it expects to produce an average 11,000 bopd from Lancaster in the current quarter.

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The Surrey-based company said it has now sold 2.5million barrels oil produced from Lancaster.

Mr Trice highlighted “Uninterrupted vessel uptime combined with good well productivity” on Lancaster.

Hurricane has noted the potential to link other finds to the giant floating production facility developed for Lancaster. This could help it speed up the pace of developments and to cut the associated costs.

Analysts at joint house broker Stifel, said of Warwick West: “Although we don’t see the headline 1,300 b/d as automatically commercial, this looks to be a result that needs further interpretation.”

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Daniel Slater at Arden said the flow rate was relatively modest compared with others Hurricane had achieved. However, he felt the result should help underpin estimates the Greater Warwick Area could contain around 900 million barrels oil. The area includes the Lincoln find, which Hurricane made in 2016.

Mr Trice said Hurricane and Spirit are assessing the optimal strategy for appraisal work in the Greater Warwick Area.

Hurricane has made five finds in an area known as the fractured basement. This lies beneath the sandstone targeted by North Sea explorers over the years.

Mr Trice founded Hurricane in 2004 to focus on the fractured basement after working for Enterprise Oil and Shell.

Centrica puts its majority stake in Spirit Energy up for sale in July after deciding to focus on supplying energy to customers. German energy investors hold minority stakes in Spirit.

Shell and BP have invested heavily in developing giant fields West of Shetland in recent years, while cutting their exposure to what they consider to be mature North Sea assets.

Chemicals heavyweight Ineos has been expanding West of Shetland.

Oil giant Equinor is reported to have made a bid to buy Siccar Point Energy which has extensive West of Shetland. RockRose Energy and private equity-backed Chrysaor Energy are also thought to be in the running to buy Siccar Point.

Hurricane Energy shares closed down 10.06p at 36.34p.