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Warwick & Lincoln 3 wells drilling 2019

lse:hur

#403

Good Morning Everyone,

The following is the result of the WW well and also an update on Lancaster. You can draw your own conclusions on the content of the RNS.

RNS Number : 2425V
Hurricane Energy PLC
02 December 2019

2 December 2019
Hurricane Energy plc

(“Hurricane” or the “Company”)

‘Warwick West’ 204/30b-4 Well Result
&
Lancaster Operational Update

Hurricane Energy plc, the UK based oil and gas company focused on hydrocarbon resources in naturally fractured basement reservoirs, reports the results of testing of the 204/30b-4 (“Warwick West”) well and provides an update in relation to the Lancaster Early Production System (“Lancaster EPS”).

Highlights

· Warwick West

o Discovery of light, 43° API oil

o Maximum stable flow rate of 1,300 bopd on natural flow

o Third horizontal well to be drilled and tested in 2019 programme

o Programme currently within time and budget forecasts

· Lancaster EPS

o 2.5 million barrels of oil sold across six cargoes to date

o Production in line with guidance for Q4 2019 of ~11,000 bopd

Warwick West Result

The Warwick West well was spudded on 24 September 2019 and was drilled to a total depth of 1,879 m TVDSS. It intersected a 931 m horizontal section of fractured basement reservoir.

The well flowed for a total of 85 hours in a number of flowing periods at variable rates, using both an electric submersible pump (“ESP”) and under natural flow, while work continued to clean the well and evaluate reservoir performance. A stable rate using an ESP could not be reliably measured as the well was still in the process of cleaning up. After an extended pressure build-up period, a final flow period was conducted under controlled natural flow conditions which achieved a stable, sustainable rate of 1,300 bopd with evidence of the well having cleaned up further. During this flowing period, less than 0.5% water was produced.

Initial analysis of oil samples indicates a light, 43° API oil. Further technical analysis of PVT fluid samples will now be carried out. This will include comparing the geochemical signature of oil from Warwick West with oils procured from Warwick Deep and Lincoln Crestal.

Warwick West is the third and final well of the 2019 programme on the Greater Warwick Area (“GWA”) which has been carried out using the Transocean Leader semi-submersible rig. In accordance with regulatory requirements, the rig will now plug and abandon the well before demobilising.

Hurricane and its joint venture partner on the GWA, Spirit Energy, are currently evaluating the results of the three wells drilled and tested in 2019. Further technical analysis will be required to determine the impact on the potential for the GWA to be a single accumulation, and on volumetrics.

Lancaster EPS Operations

On 14 November the sixth cargo of crude oil from the Lancaster EPS was lifted, taking total oil sales to 2.5 million barrels since First Oil in June 2019. Average production for the remainder of the year is expected to continue to be in-line with guidance for Q4 2019 of approximately 11,000 bopd, constrained by system availability and data gathering requirements.

As part of the data gathering exercise for the Lancaster EPS, the Company has been carrying out periods of production from the 205/21a-6 and 205/21a-7Z wells separately, to assess fluid dynamics and measure reservoir performance without the impact of interference from the other well. An interim update will be made when these flow periods have been completed, which is expected to be later in December 2019.

Dr Robert Trice, Chief Executive of Hurricane, commented:

"We are pleased to have made another discovery with the Warwick West well. The flow test results confirm the presence of light, mobile oil.

"The impact that this well will have on how the Company views the GWA accumulation and its associated volumetrics will require further technical analysis. The GWA joint venture is now assessing the optimal appraisal strategy for the GWA, and Hurricane will provide an update in due course.

"Further progress is also being made in our understanding of the Lancaster reservoir. Uninterrupted vessel uptime combined with good well productivity have allowed us to carry out additional data gathering whilst remaining in line with guidance for Q4 2019. We will provide a further update later in December.

“In 2019 we have generated a wealth of new data from both the GWA and Lancaster and I look forward to presenting our findings in detail at our proposed Capital Markets Day in Q1 2020.”

Carliol


#404

Ouch.


#405

Anyone understand why this share price has been destroyed on this mornings news?


#406

Is it commercial or an effective duster.
Even so, I’ve taken a chance and bought some more @ 36p


#407

Ash,
What’s your take on the plug and abandon? Is this well a duster? Why did Dr Trice start with “Pleased to announce”. Not understanding this at all. Why has the market reacted this way?


#408

I’m not sure if it’s good or bad, ie commercial or not.


#409

Yes, all very vauge indeed…


#410

Duster? it’s a discovery.

Because it’s a discovery… plus the oil is light and mobile.

Uncertainty, we don’t know if the flow was commercial or not as an extensive clean up could not happen in the time allowed. In comparison to Lancaster and Lincoln it was a disappointment. I guess we won’t know more about WW until the CMD in Q1 next year. Also P&D is always pounced upon, obviously this location wasn’t ideal.

WW has oil and it’s the same 43° API as Lincoln which adds weight the the single accumulation theory though not proven, further analysis will obviously help here. I see us recovering to the low/mid 40’s range until CMD or rig announcement.

jfp


#411

Thanks johnnie-fp. Appreciate your informative response. More uncertainty it seems. Do you know the allowed period in which the cleanup can take place? As for my duster comment - I just wasn’t sure whether 1300 barrels per day was commercial or not. I think the fundamentals are still there for this company and I totally agree with your comments about uncertainty. Let’s hope the uncertainty is dialled down when the next (positive) announcement is made. Thanks again for your detailed and informative response.


#412

I’m not sure if HUR know if it’s commercial or not.
They haven’t posted anything on Twitter which is unusual.


#413

On my first read through i was a bit deflated and the market thought the same; but its coming back now and so am I.

On it’s own this is not a producer but with a few others nearby it could be commercial. For me it firms up the single accumulation, same kitchen theory.

On the clean up, there was obviously too much debris to run properly through pumps and probably the reason it took so long for the testing.


#414

We don’t know if they think it’s commercial, in comparison to Lancaster/Lincoln it’s a lot lower, but Dr Trice has made a large noise previously as to how important clean up is and this well didn’t clean up fast enough within their testing window. Why? who knows. If the well cleaned up faster, even with the lower flow rate I guess (and it’s only a guess) this would be commercial, even more so with ESPs running.

I should add that upon reentering Lancaster the well had returned to virgin status and the natural flow rate (from memory) trebled.


#415

This post was flagged by the community and is temporarily hidden.


#416

Crikey, Ricfle has a friend.
Wouldn’t have guessed that one.


#417

Both Warwick Deep and Warwick West exploration wells discovered oil. If you discover oil the well is not a “duster”. Both wells have been plugged and abandoned but much technical data has been gathered. Warwick West produced 43 api oil the same as Lincoln, this could mean GWA is a single oil accumulation rather than separate fields, time and analysis will tell. Clearly it was decided the well was not commercial (or commercial enough for the JV) and it was plugged and abandoned. So much work now for HUR to decide where to drill next and not much time to decide. Why not complete Lincoln Crestal well first then drill another Lincoln appraisal/producer before deciding where to go next? HUR wanted 6 producers ready by the end of 2020 but they can now only have 4 at best. The 2019 GWA drilling campaign has been disappointing lets hope the 2020 one is better.


#418

#419

Anyone think this share price will ever recover? Is this just a complete gamble now?.. Well… Even more so than before…?


#420

Yes of course it will unless Dr T uses revenues to drill more and more dry holes which would be stupid (especially as it would be Spirit having to fund them in GWA). Surely the logical thing to do would be to use the money generated from the EPS to develop Lancaster and get the oil out and sold (before any battery breakthrough can start to eat into demand).

So it could well be years rather than months before we see the SP doubling from the current level but although the GWA was not as good as hoped, it still added more oil which can only enhance the full field development at Lancaster.

The share price dip was an over-reaction which will soon be corrected as the fundamentals remain

Flound


#421

Hindsight is a wonderful thing… Was so close to selling at FOIL…we may never reach these highs again. Its just a waiting game now… Again! I am LTH anyway but it just seems like 2 steps forward and 3 steps back with this share. Not sure why Dr T. was so please with a well that only produced 1300 barrels per day. Not exactly a duster… But close enough. I am also not sure why the market doesn’t see Lancaster as being valuable. With the production being ramped up next year, surely the share price has to be much higher than where it is now? Does anyone remember what Malcys blog based the 100p valuation on? Surely that’s a much lower number now…


#422

23 posts yesterday over there, reporting other posters and threatening court action. It was as if anyone with a different opinion was responsible for the poor RNS. Still banging on today that plug and abandon does not mean what it says. The chief idiot was drinking beer at 10.00am grinning about the RNS trying to imply a superior knowledge, then telling us about his poker hand.

A strange RNS in all, why give up on the DST when not fully cleaned up? HUR and/or Spirt are clearly seeing WW as noncommercial. What would be a commercial flow rate? Seems like there is some form of disagreement that prevents HUR form writing a fully compensable RNS. Makes you wonder if Spirt will what to pay for their half of the three well programme in 2020, if not the booked rig could do the completion works to LC then drill a couple of holes in Halifax.

The market is treating HUR as pure explorer when it drills with Warwick priced in. Yet on the other hand it only values HUR as a producer on P2. Some of this may be due to the usual PI’s panicking or greeding. Will the SP recover, possibly at the CMD, but the two Warwick wells will have cast doubt in many minds, over the volume of oil HUR has on all its fields.