MANCHESTER, UK – Hurricane Energy has conditionally raised gross proceeds of £70 million ($86 million) through a proposed issue of placing shares with both existing and other institutional investors.
The company said 205,882,353 shares will be placed at a price of 34 pence per share, raising the amount needed to secure the early production system (EPS) development timeline for the Greater Lancaster Area fields west of Shetland, as well as the drilling of two wells.
Net proceeds will primarily be used to advance the development of the fields by funding the front-end engineering, as well as certain other studies for the development’s EPS phase.
The cash will also secure acquire the subsea equipment, buoy, mooring, and control, system long lead items. In addition, it will serve to further delineate the Greater Lancaster Area by drilling an exploration well on Lincoln and on Warwick, or another similarly risked Rona Ridge prospect, with the potential for up to approximately 500 MMbbl of unrisked prospective resources.
Hurricane’s directors believe that the opportunity to begin drilling in November potentially locks in bottom-of-the-cycle rig costs, while also allowing the company to potentially drill back-to-back wells and continue using Transocean’s harsh environment Spitsbergen and its same crew.
Purchasing certain long lead items now will reduce scheduling risk and reliance on EPS financing in 1H 2017, the company said.
Farm-out discussions are expected to restart this year following completion of technical analysis of Lancaster 7 wells.
The company believes it will be in a position to make a final investment decision on the EPS phase of development in 1H 2017, with first oil targeted for in 1H 2019.
It recently announced that the side track well 205 21a-7Z achieved a sustainable flow rate. Using an electrical submersible pump of 14,500 stock tank b/d of oil, no formation water was produced. The flow rate was constrained by the test equipment. The horizontal side track well was to be suspended for use as a future producer.
Also, Hurricane provisionally selected Technip and FMC Technologies, under their alliance, as its exclusive provider of subsea solutions for the Lancaster EPS and for subsequent development of the Greater Lancaster Area.
CEO Dr. Robert Trice said: “Hurricane has had an exceptionally busy operational period of activity with outstanding results from the pilot and horizontal side track wells. Building on those results, we are delighted to announce today’s fundraising which allows us to capitalize on the operational momentum and proceed imminently with a campaign to further improve our understanding of the Greater Lancaster Area; potentially add considerable near-field resources; and secure the development timetable for the Lancaster EPS …
“With a number of catalysts including the results from the two new wells, securing an FPSO for the EPS, further results from the Lancaster 7 well drilling, a new competent Person’s Report in 1H 2017, and sanction of the EPS, the next 12 months are expected to be an exciting period for the company.”