WEST of Shetland-focused Hurricane Energy has underlined the scale of the challenges it will face operating in the area following the slump in the oil price amid the fallout from the coronavirus crisis.
Hurricane helped stoke huge excitement about the potential of West of Shetland in recent years by making big finds in the area. It made $30 million (£24m) profit last year after starting production from the giant Lancaster field in June.
However, in the company’s annual report its chairman Steven McTiernan said: “Given the major impact of the Covid-19 pandemic, all future opportunities are being re-evaluated taking into account much lower oil prices.”
Experts warn: Oil price plunge will mean end for range of North Sea fields
He noted: “The costs and time required to exploit such opportunities in the operating environment West of Shetland are significant, and a supportive economic environment is a pre-requisite.”
Mr McTiernan said Hurricane’s board will exercise extreme caution over the scale and pace of future capital spending, although it has a strong balance sheet.
He warned that investor interest in the sector has “drastically reduced”..
The comments provide a further indication that firms that control North Sea fields are bracing for a long downturn.
Businesses in the supply chain are already coming intense pressure following the fall in the crude price this year and the logistical challenges posed by the coronavirus.
200 North Sea jobs at risk as oil services firm plans deep cost cuts
Brent crude sold for around $28 per barrel yesterday afternoon against $70/bbl in January.
Experts warned that record production cuts agreed by Opec Plus countries at the weekend were not on a big enough scale to make much difference to oil prices.
Rystad Energy said: “This is a crisis that needs bolder mobilization from producers.”
The consultancy said firms were likely to slash investment in UK North Sea developments and exploration activity in the area in the current oil price environment.
Momentous Opec Plus production deal may not lighten gloom in North Sea
Bjarne Schieldrop at Scandinavian bank SEB noted that Saudi Arabia and Russia had signalled they might agree to make deeper production cuts.
Hurricane Energy’s annual report shows chief executive Robert Trice earned £604,000 total remuneration in 2019, in line with the preceding year.
Mr McTiernan earned £150,000 fees in the latest year.
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