What it owns
Extended production will allow Hurricane to gain a better understanding of the reservoir for all of its licences.
Spirit is also the partner on the Greater Warwick portion of Hurricane’s West of Shetland portfolio.
Together, the Greater Lancaster (GLA) and Greater Warwick (GWA) areas span a large geologic feature known as the Rona Ridge.
The deal with Spirit Energy sees Hurricane trading away 50% of the Greater Warwick Area in return for up to US$387mln for well-drilling and development programme that aims to deliver first production by 2020.
Cashflows from the Lancaster EPS can now be reinvested back in the larger Lancaster field development (rather than fund exploration and appraisal activity), said Hurricane (LON:HUR).
Greater Warwick Area
Spirit’s Phase 1 programme will see three new wells drilled in 2019.
It aims to accelerate the appraisal of Lincoln and confirm the Warwick discovery.
Hurricane will be ‘carried’ in the US$180.6mln initial drilling programme.
Lincoln Crestal well, 100km off the west coast of the Shetland Islands was spudded in July and flowed at rates of up to 9,800 barrels of oil per day in testing.
That peak rate was achieved with the use of electrical submersible pumps while under natural conditions the well flowed an average of 4,682 bopd.
Lincoln Crestal is the second of three wells being drilled in the Greater Warwick Area, which neighbours the now producing Lancaster field.
In Phase 2, assuming prior wells are successful, Spirit will lead field development work aimed at connecting the GWA fields to infrastructure due to be in place at the Lancaster field which, at that point, would be online.
Spirit and Hurricane are expected to spend some US$187mln on this phase of work, which will include upgrades to the Aoka Mizu floating production, storage and offloading (FPSO) vessel, pipelines, and other engineering.
Presently, the initial GWA development is suggested as a single well tie-back to Lancaster’s Aoka Mizu for some 10,000 barrels of oil per day.
Also, Spirit will be expected to contribute some US$150-250mln to cover Hurricane’s share of additional, contingent costs of a larger field development at the GWA.
Result from LIncoln Crestal and third well in GWA
Production ramps up to 20,000bpd
Hurricane wants a year's worth of production data to be able to assess fully the reservoir