Just a month after declaring first oil at its Lancaster field, Hurricane Energy (HUR) has had a setback to its expansion plans in the North Sea. The explorer and new producer’s Warwick Deep well has proved uncommercial after almost 2,000 metres of drilling, with the company saying the well “intersected a poorly connected section of the fracture network”. This news saw the share price fall by as much as 18 per cent on the day of the market update.
Warwick Deep is part of Hurricane’s fractured basement play, which is a first for the UK continental shelf. The exploration work was funded by Spirit Energy through a farm-in deal from last year, and now the joint-venture partners will move on to the Lincoln Crestal well as part of the $180m (£142m) phase one exploration programme.
Hurricane had put a 935m barrels of oil equivalent (mboe) best case prospective resource estimate on the Warwick field overall, with a 77 per cent chance of discovery. Lincoln Crestal has a 2C contingent resource of 604mboe.
Berenberg analyst Ilkin Karimli said the Warwick Deep well was supposed to “prove or disprove a fault between Warwick and Lincoln” but the company did not spell this out in the announcement - investors should expect more details on July 11, Hurricane’s capital markets day. Mr Karimli said Lancaster was still the key part of Hurricane’s portfolio: “The success of the Lancaster development will ultimately be determined by the connectivity of the fracture network in the granite reservoirs”.
