Hurricane secures cash injection for two wells west of Shetland
Kerogen Capital has agreed to invest $63 million in UK independent Hurricane Energy via a shares purchase.
GODALMING, UK – Kerogen Capital has agreed to invest $63 million in UK independent Hurricane Energy via a shares purchase.
Assuming approval from Hurricane’s shareholders next month, Kerogen will have a 29.9% in the company.
Hurricane operates two basement oil discoveries west of Shetland, each with independently certified resources of around 200 MMboe.
Kerogen’s planned capital injection will fund drilling of one appraisal and one producer well this year onLancaster for an early production system (EPS).
Hurricane says the funding will allow it to secure the required oilfield services and should accelerate the time to first oil, currently targeted for 1H 2019.
Kerogen which aims for representation on Hurricane’s board and on a newly formed joint technical committee, has also invested in Zennor Petroleum which is currently appraising theFinlaggan discovery in the UK central North Sea.
During 2014, Hurricane drilled and tested a 1-km (0.6-mi) horizontal well onLancaster that flowed 9,800 b/d using artificial lift provided by an electric submersible pump (ESP).
The low drawdown rates and associated high Productivity Index (PI) of 160 b/d/psi confirmed the reservoir’s commercial potential: the well was suspended for use as a future producer.
Hurricane is working on a phased development with the EPS based on two 1-km horizontal subsea production wells – the existing well from 2014 and a new horizontal well, both tied back to an FPSO via a 2-km (1.2 mi) flowline and control umbilical.
The board believes development would be further de-risked by drilling a pilot well to confirm the depth of mobile oil and the oil-water contact level. This would also assist evaluation of a potential aquifer below the oil-water contact to determine how supportive it is of production.
Hurricane has contracted the semisubmersibleTransocean Spitsbergen for the program, although the contract remains conditional on completion of the fundraising.
The directors believe the required number of wells for the EPS phase will be resolved once the two wells have been drilled, thereby facilitating a final investment decision and discussions with potential farminees.
They are targeting a final investment decision of 1H 2017 for the EPS phase, pending the results of this year’s wells and completion of pre-FEED subsea and FPSO engineering studies.
An EPS could produce around 53 MMbbl, they claim, at a rate of 17,000 b/d for a total capital cost, excluding this year’s wells, of up to $240 million.
Projected opex costs of around $35/bbl include the lease costs of the FPSO.
Last month, Hurricane also secured an extension to the drilling commitment on the P1485 and P1835 licenses in the same region to 2018: these contain the Typhoon and Tempest prospects.
The board is looking to reduce the acreage in both cases.
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