WEST of Shetland oil pioneer Hurricane Energy has seen its shares plunge 17 per cent after the problems facing the company deepened.
Hurricane shot to prominence after making a series of finds in an under-explored area off Shetland.
However, since starting production from the Lancaster field last year the company has suffered a series of setbacks.
READ MORE: Chief executive quits at pioneering Shetland oil firm as hopes of boom in area fade
Chief executive Robert Trice resigned in June. The preceding month the company suspended its production guidance following problems with a well on the early production system (EPS) developed for Lancaster.
The company said yesterday its board had concluded there was a risk of a material downgrade to estimated reserves attributable to the Lancaster EPS.
The warning was based on findings of a technical review launched in June, which is ongoing.
Hurricane yesterday reiterated that the review could result in big cuts in estimates of the size of finds made after Lancaster. As the company has not yet established that these finds are commercially viable, the barrels the hydrocarbons they may contain are classed as contingent resources.
READ MORE: Finds off Shetland may contain much less oil and gas than hoped for
“The company believes there is a risk of a material downgrade to estimated reserves attributable to the Lancaster Early Production System, and that there will also be a material downgrade to estimated contingent resources across the West of Shetland portfolio,” Hurricane told investors.
Completion of the technical review is expected on or before the publication of the company’s interim results on September 11. The company expects then to be in a position to provide an update regarding estimates of reserves for the Lancaster field.
Production from Lancaster has been suspended since August 2 to allow repair work to be completed on the giant floating production facility used on the field. It is expected to restart imminently.
Hurricane was producing 17,000 barrels oil per day from Lancaster before the field was taken off line. It had been targeting a plateau production rate of 18,000 bopd from Lancaster.
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Hurricane is expected to use the results of the Lancaster EPS to decide whether to proceed with a much bigger development.
Shares in the company closed down 1.07p, at 5.08p. They sold for 58p in May last year.
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