WEST of Shetland exploration pioneer Hurricane Energy has noted its acreage may contain much less oil and gas than had been thought.

Hurricane stoked huge excitement about the potential of the West of Shetland area by making a series of finds in an area in which there had been little activity.

However, the company has seen its share price plunge in recent months after it suffered operational setbacks and was hit by the fallout from the crude price plunge triggered by the coronavirus.

Chief executive Robert Trice resigned last month.

READ MORE: Chief executive quits at pioneering Shetland oil firm as hopes of boom in area fade

In an update on operations Hurricane raised the prospect that estimates of the size of finds it made after Lancaster may be reduced.

It said a review of an expert report produced in 2017 may lead to a “material downgrade” of estimates of contingent resources that it contained.

Contingent resources include finds that the company has yet to confirm it would be commercially viable to bring into production.

The Competent Persons Report referred to was released in December 2017. It assigned around 1.8 billion barrels contingent resources in total to the Halifax and Lincoln discoveries.

Hurricane’s comments may dampen excitement about the potential of finds the company made West of Shetland in the wake of the Lancaster discovery.

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These helped boost hopes that the area could support a big increase in activity for the North Sea supply chain that might last for years.

A downgrade of contingent resources would not apply to the Lancaster field.

Hurricane brought Lancaster into production last year but has faced challenges on the field in recent months.

The company suspended its production guidance in May after hitting problems with a well on Lancaster.

Hurricane said yesterday that production has increased to around 15,000 bopd from 12,000 bopd following the restart of production from the well. This was shut in in May.

Hurricane had been targeting a plateau production rate of 18,000 bopd from Lancaster.

The results of the early production system developed for Lancaster will be used by Hurricane to decide whether to proceed with a much bigger development.

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Following Mr Trice’s resignation last month Hurricane said that given the difficult macroeconomic backdrop and the need to strengthen the company’s balance sheet, its board was keenly focused on the need to increase production, whilst also keeping capital expenditure focused and to a minimum.

Hurricane said yesterday that it did not expect to be able to complete any well operations activity on Lancaster until the first quarter of 2021.

It cited the design and procurement lead times likely to be involved coupled with the constraints of the operational weather window West of Shetland during the winter months.

The company said it was working with its partner Spirit Energy to find the best way for the Lincoln discovery.

Spirit bought in to the acreage containing Lincoln in 2018 when it agreed to fund $180m drilling work.

The resulting campaign included work on the Warwick prospect which produced disappointing results.

Centrica put its majority stake in Spirit up for sale last year after deciding to focus on the supply of gas and electricity to consumers and businesses.

After announcing last month that Mr Trice had resigned as a director, Hurricane said he would remain available to assist the company during a transition period of six months.

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Beverley Smith was appointed interim chief executive. Ms Smith had become a non-executive director of Hurricane in December after a 30-year career with the former BG.

Mr Trice started Hurricane in a shed in the garden of his Surrey home in 2004 after working for Enterprise Oil and Shell, to focus on an area of granite rock called the fractured basement.

This lies beneath the sandstone targeted by most North Sea wells.

Hurricane Energy’s shares have fallen to around 6p from 58p in May last year.

In yesterday’s update the company said: “The Technical Committee of Hurricane’s Board is re-examining the full range of possible geological and reservoir models for the Lancaster field.

“The 2017 Competent Person’s Reports attributed independently certified reserves to the Lancaster EPS (early production system) development and contingent resources associated with the overall West of Shetland portfolio. The outcome of the technical review may lead to a material downgrade of these contingent resource estimates.”