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Significant Upgrade to Reserves at Hurricane's Lancaster Field

Source: www.gulfoilandgas.com 5/8/2017, Location: Europe

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Hurricane Energy plc, the UK based oil and gas company focused on hydrocarbon resources in naturally fractured basement reservoirs, is delighted to report the publication of an updated Competent Person's Report (Lancaster CPR) by RPS Energy Consultants Limited (RPS) concerning reserves and resources at the company's Lancaster field (Lancaster), West of Shetland, which attributes 2P reserves for the first time and details a highly significant increase in certified contingent resources. The CPR only concerns the Lancaster field within Licence P.1368 Central, at present. Resource estimates for the Greater Lancaster Area, and broader portfolio, are expected to be published by the end of the year.

Highlights:

· Best estimate recoverable volumes of 523 million barrels of oil, an increase of 162% compared to the 2013 CPR 2C contingent oil resource figure
· 2P reserves of 37.3 million barrels of oil attributed to the initial six-year period of the planned Early Production System ("EPS") at Lancaster
· The remaining 484 million barrels are classified as 2C Contingent Resources as 'Development Unclarified or On Hold' whilst the EPS assesses full field development potential
· Should Hurricane extend the EPS to ten years, 2P reserves volume would rise to 62.1 million barrels
· Best estimate of oil in place of over 2.3 billion barrels of oil, an increase of 120% compared to the equivalent 2013 CPR figure
· An NPV of $525 million is attributed to the 2P reserves for a six-year EPS at a 10% discount rate

Since its 2013 CPR , the Company has successfully drilled five wells in its licences in the area (including a horizontal sidetrack). At Lancaster, this included drilling and testing 205/21a-7 (the "Pilot Well"), and two 1km horizontal production wells, 205/21a-6 (the "6 Well") and 205/21a-7Z (the "Horizontal Sidetrack Well"). The Pilot Well confirmed the presence of oil significantly below structural closure and successful Drill Stem Tests were carried out on both the 6 Well and the Horizontal Sidetrack Well, producing at maximum stable rates of 9,800 stb/d and 15,375 stb/d respectively (using Electric Submersible Pumps). These wells significantly improved the Company's understanding of the reservoir and expected performance of the first phase of Lancaster's development, the EPS.

RPS assigns combined 2P reserves plus 2C resources of 523 million barrels of oil to Lancaster, based on a recovery factor of 22.5%. This is an increase of 162% compared to the 2013 estimate of 200 million barrels of oil. The Lancaster CPR attributes 2P reserves at the field, with 37.3 million barrels of oil to be produced by the planned EPS, assuming output duration of six years. The six-year base case duration of the EPS is based on the assumption that this allows sufficient time for the full field development to be planned and commenced. The Lancaster CPR notes that the 2P reserve volume would rise to 62.1 million barrels of oil should Hurricane extend the EPS to ten years. The basis of design for the EPS is for ten years and it has been agreed with Bluewater Energy Services that the contract for the Aoka Mizu FPSO would include an extension option for up to ten years. The Company therefore sees no technical impediments to extension to ten years, should it be deemed commercially attractive to do so bearing in mind other operations on Lancaster and Hurricane's other assets.

Dr Robert Trice, Chief Executive of Hurricane, commented:

"We are delighted to now have independent verification of the highly material uplift in the resources we have at Lancaster. It is also a landmark for Hurricane to have reserves assigned at the field relating to our planned EPS, for which we continue to advance plans, maintaining our target for first oil of H1 2019. We expect to publish CPRs relating to Halifax and Lincoln later in 2017, which we are confident will be a material addition to our already significant resource base."

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Related Categories: Formation Evaluation  General  Geological, Geophysical  Geophysical Contractors  Mud Logging  Reservoir Engineering & Recovery Methods  Seismic survey  Well Completion, Logging, Workover 

Related Articles: Formation Evaluation  General  Geological, Geophysical  Geophysical Contractors  Mud Logging  Reservoir Engineering & Recovery Methods  Seismic survey  Well Completion, Logging, Workover 


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