WEST of Shetland-focused Hurricane Energy has seen its shares fall 25 per cent from a low base after a report raised fresh doubts about the value of finds it made that excited the industry.

Hurricane achieved renown on the back of the success it enjoyed in a pioneering hunt for oil in an under-explored layer of rock off Shetland.

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However, after slashing estimates of the size of the one find it brought into production, the company has faced big challenges amid the downturn in the industry triggered by the coronavirus.

This has made it tough for independents to secure the backing they need to invest in developing North Sea fields.

Hurricane has been trying to win support from creditors for a refinancing which it has warned could see existing shareholders left with a fraction of the company.

The scale of the challenge it faces was underlined by the findings of an expert report that the company released yesterday.

The company said it had written off the $35 million (£26m) book value of the Halifax find in full in light of the findings of the Competent Persons Report (CPR).

The report, which was completed by the ERC Equipoise consultancy, also found that the Warwick discovery was likely much smaller than had been hoped.

READ MORE: Hurricane Energy chief executive quits 

In September Hurricane posted a $300m first half loss after directors made big cuts to estimates of the size of the producing Lancaster field, and the undeveloped Lincoln discovery.

It warned then that the conclusion of a technical review launched in June was likely to lead to a significant downgrade of the prospective resources attributed to Warwick.

Chief executive Antony Maris said yesterday that the summary of the CPR report was broadly consistent with the estimates for Lancaster and Lincoln presented in September.

He added: “We are continuing to work on a financial plan and are engaging with our key stakeholders to allow us to take the business forward and provide us with the best chance of targeting these reserves and resources.”

Hurricane noted it would need to do further drilling work on Lincoln and Warwick to determine if they might be commercial.

It would also need to do more work on Lancaster in order to find out if a larger scale development would be viable.

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The company would have to be able to fund any related development plans.

In respect of each of the three fields, the company warned yesterday: “There can be no certainty of any further activity.”

Hurricane noted that it continues to engage with an ad hoc group of holders of the $230m convertible bonds it issued in 2017 regarding a refinancing that could involve a debt-for-equity swap.

The company added: “It should be noted that there is a risk of significant dilution to existing shareholders from a possible restructuring and/or partial equitisation of the convertible bonds and of potentially limited or no value being returned to shareholders.”

The process will be followed closely by sector watchers. Hurricane’s early successes fuelled hopes that there could be a boom in the West of Shetland area that would help breathe fresh life into the wider North Sea industry.

Scottish Gas owner Centrica bought into Hurricane’s Greater Warwick Area (GWA) acreage in 2018, through its Spirit Energy business. Spirit agreed to fund $180m drilling work in the area.

READ MORE: Scottish Gas owner slashes valuation of West of Shetland exploration acreage

Centrica put its majority stake in Spirit up for sale in 2019 but has yet to find a buyer.

Hurricane was founded by geologist Robert Trice, who ran the business initially from a shed in the garden of his Surrey home.

Mr Trice decided to focus on the so-called fractured basement layer of granite that lies beneath the sandstone targeted by most North Sea wells. He resigned as chief executive in June.

Hurricane Energy shares closed down 0.7p at 2.7p. They sold for 58p in May 2019.