By Ian McConnell

SHARES in West of Shetland-focused Hurricane Energy tumbled 46 per cent yesterday after the oil and gas company revealed the results of testing of elevated combined production rates for the two wells on its Lancaster field have been “disappointing”.

Hurricane said it was suspending its previous guidance of net 17,000 barrels of oil per day (bopd) production for its full financial year to end-December, citing “interference” between the two wells in the early production system (EPS) at Lancaster. It noted production had averaged 15,500 bopd during the year to date.

Shares in Hurricane, which owns 100% of the Lancaster field, fell 5.67p to 6.54p.

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Chief executive Robert Trice noted the “proximity” of the two wells in the EPS and their “associated interference behaviour” as he commented on the “disappointing” testing results.

Hurricane noted, as previously announced, it had been carrying out testing of the two Lancaster EPS wells “in order to determine the sustainability of combined production rates up to gross 20,000 bopd”.

Noting the “impact of increasing production rates resulted in instability in the flow regime” on one well as a result of interference between the wells, it said: “Achieving this target rate at a sustainable level has not been possible.”

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Hurricane has decided to shut-in one of the wells “for the time being”.

It said it would return to a period of testing maximum sustainable rates of production from the other well, which is currently producing at a rate of around 10,300 bopd.

Hurricane added: “The company plans to increase this rate incrementally, to determine its maximum sustainable level. This process will result in a period of production substantially below forward guidance of net 18,000 bopd and Hurricane is therefore suspending previous full-year guidance of net 17,000 bopd.”

It has been estimated that 523 million barrels of oil may be recoverable from the Lancaster field.

Mr Trice said: “The results of the recent testing of the Lancaster EPS wells at elevated combined production rates are disappointing and the degree of interference encountered is unexpected. Whilst the wells show high productivity individually, their proximity and associated interference behaviour requires further data acquisition before the company can be confident about optimum long-term well rates.

“This latest development reinforces that. This data acquisition process continues, and further updates will be provided once we have determined our target plateau production rate with the existing well configuration.”