Hurricane Energy PLC (LON:HUR) Operational Update

Dr Robert Trice, Chief Executive of Hurricane, commented: We are delighted to provide an update on Lancaster EPS progress and to communicate that our production levels have been above expectations for this early phase of operations.

However, despite these promising results, we remain cognisant that it will take up to a year to acquire and interpret sufficient performance information to test our reservoir model of the field.

Lancaster EPS and Lincoln Crestal Well

Hurricane Energy plc, the UK based oil and gas company focused on hydrocarbon resources in naturally fractured basement reservoirs, is pleased to provide an operational update in relation to the Lancaster Early Production System (“Lancaster EPS”) and the 205/26b-14 well (“Lincoln Crestal”).

Highlights

· Lancaster EPS system availability and production since First Oil above guidance

· Average production rate of c. 14,400 barrels of oil per day (“bopd”) from First Oil to latest lifting on 17 August

· 1.2 million barrels of crude oil sold to date

· Lincoln Crestal well now being prepared for drill stem testing

Lancaster EPS

The start-up phase of the Lancaster EPS commenced with introduction of hydrocarbons on 11 May 2019. The first oil milestone (“First Oil”) was achieved on 4 June 2019. For a significant portion of the period from First Oil to date, production has been constrained by the use of only one of two subsea flowlines, as a result of operational necessity. This has limited maximum production capacity and Hurricane’s ability to carry out activities planned to increase the Company’s understanding of the reservoir’s performance. Notwithstanding this constraint, since First Oil, Lancaster EPS system availability, production and cash flow generation have been above Company guidance.

Operations have now recommenced with two flowlines. As operations move into the next phase of commissioning over the coming months, production and availability are likely to be constrained as certain planned works and delayed data gathering activities will require periods of production shut-in. Hurricane therefore expects system availability to revert towards prior guidance, being 45% for Q3 and 65% for Q4.

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Lancaster EPS performance to date:

· Average production rate: c. 14,400 bopd from First Oil to latest lifting on 17 August 2019

· Total crude oil liftings: 1.2 million barrels over three cargos

· Overall system availability: currently in excess of 85% long term guidance

· Most recent aggregate stabilised water cut: 7.5%

Hurricane’s analysis of water production continues to indicate the presence within expected ranges of stranded or perched water, with no indications of aquifer water. Production over the last month has been through a single flowline and therefore water cut cannot be attributed between the two wells. Further data will be available now that production through both flowlines has recommenced. This will facilitate better understanding of individual well performance and water cut. It will also allow planned flow rate variation to be undertaken, in order to optimise well performance.

Forward commissioning for the Lancaster EPS over the coming months will include:

· Fuel gas compressor commissioning to reduce long-term flaring levels and operational expenditure

· Produced water system commissioning activities

· Return to dual flowline operations

Further operational commentary on Lancaster EPS performance will be made in Hurricane’s 2019 interim results, scheduled for release on 20 September 2019.

Hurricane maintains its production guidance for the second half of 2019 at the aggregate level (Approximately 11,000 bopd based on previously advised expected system availabilities of 45% in Q3 and 65% in Q4).

Lincoln Crestal Update

Lincoln Crestal is the second well in a three-well programme on Lincoln and Warwick (the “Greater Warwick Area”) being drilled in partnership with Spirit Energy following their farm-in to 50% of the Greater Warwick Area in September 2018. The wells are being drilled using the Transocean Leader semi-submersible drilling rig.

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Lincoln Crestal was spudded on 12 July 2019 and has now reached total depth of 1,780 m TVDSS, including a 720 m horizontal section of fractured basement reservoir. Lincoln Crestal operations have now moved onto preparation for drill stem testing. A further update will be made following the completion of this stage.

Dr Robert Trice, Chief Executive of Hurricane, commented:

“We are delighted to provide an update on Lancaster EPS progress and to communicate that our production levels have been above expectations for this early phase of operations. However, despite these promising results, we remain cognisant that it will take up to a year to acquire and interpret sufficient performance information to test our reservoir model of the field.

“Now that we are back to flowing the Lancaster wells through separate flowlines, we look forward to gathering data on individual well performance to help optimise well delivery as well as improve the Company’s understanding of the reservoir’s performance.

“On the Greater Warwick Area, Lincoln Crestal well operations are now progressing to drill stem testing. We look forward to reporting the result shortly.”

 


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