SHETLAND-focused Hurricane Energy has seen its shares plunge 13 per cent following an update from the firm which may dim excitement about the long-term potential of the area.

Hurricane has generated huge interest in the oil and gas industry by making finds in an under-explored geological zone West of Shetland.

However, the company said yesterday it will scale back activity as it looks to retain cash amid the challenges posed by the slump in the oil price triggered by the coronavirus.

Warning: 30,000 North Sea jobs could be lost amid oil price slump triggered by coronavirus

Brent crude traded at around $19.60 per barrel yesterday afternoon compared with around $70/bbl in January.

The fall has impacted the revenues Hurricane generates from the Lancaster field, which it brought into production last year.

Its chief executive Robert Trice observed: “The current oil price does not pose an immediate threat to the Company as we continue our data gathering programme at Lancaster. However, it does limit options for capital expenditure on additional operational phases.”

He added: “Our capital allocation framework has been revised to account for the current market environment and is focused on retaining a strong cash balance.”

West of Shetland oil pioneer highlights 'drastic reduction' in investor interest in sector

Hurricane noted yesterday that it can produce oil from Lancaster at $17/bbl.

The Surrey-based company said the results of a three well drilling programme completed in the Greater Warwick Area (GWA) last year indicated productivity on it was materially less than on the Lancaster field.

“The GWA basement appears to have less well-developed reservoir qualities compared to Lancaster,” said Hurricane.

The Spirit Energy business owned by Centrica bought in to GWA in 2018 when it agreed to fund $180m drilling work.

West of Shetland prospect in focus for energy giant

Centrica put its majority stake in Spirit up for sale last year.

Shares in Hurricane Energy closed down 1.54p, at 10.25p.