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Hurricane Energy PLC updates on one-well Lancaster oil operation

Hurricane set guidance of 12,000 to 14,000 bopd for the period to the end of the year.

Hurricane Energy PLC (LON:HUR) gave an update confirming its continues to produce from just one well.

Presently, the Lancaster oil field is flowing at a rate of 14,500 bopd representing a rebound from decline during the third quarter.

In early August the 205/21a-7z well was shut-in and also in August the field’s floating production storage and offloading (FPSO) vessel underwent repair and maintenance.

Production totalled 1.25mln barrels in the third quarter, down from 1.3mln in the second, whilst the rate averaged 13,600 bopd versus 14,300 bopd in the second quarter. Water cut was measured at 26% in the third quarter, compared to 21%.

Hurricane set guidance of 12,000 to 14,000 bopd for the period between September 1 to December 31.

The company also announced that it will cancel its decommissioning bond which following recent crude price decline and reserves downgrade would now require 100% cash collateral. Instead, the company intends to hold cash, £16.8mln, in trust to meet the company’s obligations.

In London, Hurricane shares were slightly higher.

Stockbroker SP Angel described the update as “further disappointing news” which outlined the expected reduction in production and the new restriction on a material proportion of the company’s available cash position.

Analyst Sam Wahab noted that there’ll be a lack of well activity and he reckons prolonged negative sentiment will continue to weigh on the Company’s shares this year.

“A declining production profile coupled with a growing net debt position will also come as an unwelcome concern for investors in our view,” he said in a note.

Read More: Hurricane Energy PLC updates on one-well Lancaster oil operation

2020-10-08 05:18:00

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