60. Hurricane Energy
Hurricane Energy (HUR) is less than a year into production in the North Sea through the Lancaster early production system (EPS). Its 2019 revenue of $170m (£136m) and cash flow of $112m has come at the right time – it is in a net cash position now, excluding the sizeable lease liability it has for the Aoka Mizu FPSO vessel, which serves as its production hub. Production this year is expected at an average 17,000 barrels of oil per day (bopd) from the two wells connected to the FPSO.
At its capital markets day at the end of April, Hurricane told investors there was some concern over the production performance, despite output increasing this year. The water content from Lancaster has increased to 26 per cent. Hurricane said this was most likely ‘perched’ water that is separate from the underlying aquifer, meaning the water content from the well would stabilise or decline rather than keep increasing.
The greater issue currently for Hurricane is how to react to the oil price crashing. The company has already had to adjust its plans based on the test well results of the Greater Warwick Area, which is near Lancaster. Two of the wells were not commercially viable, and another, Lincoln Crestal, could have been tied back to the Aoka Mizu but has not received the permit to do so. The current plan is to plug the well if the green light doesn’t come by 30 September.