SHETLAND-focused Hurricane Energy has seen its shares plunge around 17 per cent after it suffered a fresh setback.

Hurricane has helped stoke huge interest in the West of Shetland area by making a series of discoveries in a relatively under-explored layer of rock.

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It seemed set for great things after starting production from the bumper Lancaster field in June.

However, following yesterday’s 17% share price fall the value of the firm’s shares has dropped by around 70% in total since Lancaster came onstream.

The decline suggests investor confidence in the potential of Hurricane’s acreage is waning. The drop in the crude price since December amid concern about the global outlook may have weighed on sentiment.

The fall in Hurricane’s share price gathered pace in December when the firm said it had made another find off Shetland, with the Warwick West well. Initial indications were that the find was not as big as others made by the company.

Yesterday’s movement appeared to be triggered by news that the timetable for the start of production from the Lincoln find made in 2016 had been thrown into question.

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Hurricane had hoped to complete work this year on a project to connect the Lincoln find to the floating production storage and offloading (FPSO) vessel installed for Lancaster.

This would have allowed it to start production from the field relatively quickly and cheaply.

However, Hurricane said yesterday that the partners in the project had concluded it would not be possible to tie Lincoln in to the FPSO this year.

It is understood the firms were unable to get regulatory approval for the tie-back in time to complete the work involved.

The company indicated that the partners still hope to be able to complete a tie back noting they had agreed to continue to build all the previously ordered equipment.

It did not say when production from Lincoln is expected to start.

Describing the news on Lincoln as disappointing, analyst Daniel Slater at Arden Partners suggested shares in Hurricane could remain under pressure until the firm provides further assurance about the long-term potential of the Lancaster area.

The company’s progress will be followed with great interest in the industry.

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Led by Robert Trice, Hurricane has focused on an area of rock called the fractured basement which lies beneath the sandstone targeted by most North Sea explorers.

Mr Trice’s faith in the potential of the company’s acreage appears to remain undiminished.

Yesterday he noted that the company plans to drill an additional production well on Lancaster this year.

This could pave the way to a significant increase in output from Lancaster which averaged 12,900 barrels oil per day last year.

“Increased production through the Aoka Mizu FPSO would improve unit economics and generate increased operating cash flow for providing returns to shareholders and/or funding future phases of development,” said Hurricane.

Developments in respect of Warwick and Lincoln have posed challenges for Centrica-owned Spirit Energy. This provided a huge vote of confidence in Hurricane in September 2018 when it bought in to the company’s Greater Warwick Area acreage.

Spirit agreed then to fund $180m drilling work. It supported a three-well campaign that included two Warwick wells. The Warwick Deep well in July did not flow oil or gas at commercial rates. A well drilled last summer to appraise the Lincoln find produced encouraging results.

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Centrica has put is majority stake in Spirit up for sale. The Scottish Gas owner wants to focus on supplying energy to consumers and businesses.

Shares in Hurricane Energy closed down 3.6p at 17.5p. They sold for 56.15p after the start of production from Lancaster in June.

Separately, the North Sea focused Longboat Energy founded by former directors of Aberdeen-based Faroe Petroleum said it is eyeing a number of acquisition opportunities. Longboat’s chairman Graham Stewart helped Faroe develop big North Sea operations. After the £640m hostile takeover of Faroe last year by Norway’s DNO, he said he had unfinished North Sea business.