SHETLAND oil pioneer Hurricane Energy has seen its shares plunge around 13 per cent after the company suffered a fresh setback.

Hurricane helped generate huge interest in the West of Shetland area by making a series of discoveries in a relatively under-explored layer of granite.

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However, the company was left facing big challenges after slashing estimates of the sizes of some finds. These include the Lancaster field, which Hurricane brought into production in 2019 only to hit problems with a well.

Hurricane hoped to be able to drill an additional well on Lancaster this year in order to boost production from the field.

It said yesterday: “The Company has concluded that it will not be possible to drill this well during the 2021 summer weather window without unacceptable operational and cost risk.”

The company made the decision after concluding that the proposed well would be more complex than others drilled on Lancaster.

Regarding potential ways forward on Lancaster, Hurricane noted yesterday: “All options for potential further development activity are subject to factors which are or may be outside the Company’s control which include field performance, prevailing oil prices and support from relevant stakeholders and counterparties.”

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Hurricane has been seeking the support of stakeholders to allow it to complete work that could improve the performance of Lancaster against a very challenging backdrop.

The fallout from the coronavirus crisis sent oil prices plunging and frightened investors away from the sector.

The stakeholders referred to by Hurricane include holders of $230m bonds issued by the company in 2017. These are due to be redeemed in July next year.

Hurricane said yesterday that discussions on its forward work programme, strategy, financing and balance sheet recapitalisation are ongoing, without indicating what options were under consideration.

Analyst Daniel Slater at Arden Partners noted that Hurricane is still generating significant amounts of cash from the output from Lancaster. The company has benefited from the partial recovery in oil prices that has followed advances made on the coronavirus vaccine front in recent weeks.

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However, a partner in Hurricane’s Shetland exploration drive appears to have lost enthusiasm for the area.

The Centrica-owned Spirit Energy acquired a stake in Hurricane’s acreage in the Greater Warwick Area in 2018 and funded $180m drilling work on it.

Last week Centrica said it had cut £135m off its valuation of the Greater Warwick Area assets, citing “significant uncertainty over field development”.

Centrica put its stake in Spirit up for sale in 2019.

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Hurricane’s founding chief executive Robert Trice resigned in June.

Shares in the company closed down 0.5p at 3.2p yesterday. They sold for 58p in May 2019.