Hurricane Energy is an E&P focused on fractured basement exploration and development in the West of Shetland region. The company’s 100%-owned Lancaster oil discovery (523mmbbl 2P reserves + 2C resources) commenced production in June 2019.
Investment summary
Hurricane Energy is a UK-based E&P focused on hydrocarbon resources in naturally fractured basement reservoirs. Hurricane’s CPRs ascribe 2P reserves + 2C contingent resources of 2.6bn boe (gross) across all assets. On 4 June 2019, first oil was achieved on the Lancaster Early Production System (EPS); Hurricane anticipates a gradual ramp-up in facilities availability over the next six months. In June 2019, the company sold its first cargo thus generating its first revenues from the Lancaster EPS. Focus will now shift to data gathering to enhance reservoir understanding. Successful confirmation of modelling parameters will aid in the de-risking of full field development. Hurricane’s 2019 three-well drilling programme commenced with Warwick Deep which intersected a poorly connected section of the fracture network within the oil column. The second well, Lincoln Crestal, was spud on 12 July 2019. Our valuation stands at 102.3p/share and is currently under revision following the Warwick Deep result.
The Lancaster EPS development is forecast to generate a point-forward IRR of c 40% based on our US$70/bbl long-term Brent commodity price assumption.
