Hurricane Energy PLC

Hurricane Energy to move onto Lincoln Crestal well after Warwick Deep disappointment

Despite initial encouraging signs, Warwick Deep did not flow at commercial rates, and the drill rig will now move onto the second well in the programme, Lincoln Crestal

offshore oil rig
Hurricane Energy has a 50% interest in the Greater Warwick Area

Hurricane Energy PLC (LON:HUR) is to move onto the next well in its drill programme after deciding to plug and abandon the Warwick Deep well, located off the west coast of the Shetland Islands.

The well was drilled to almost 2km below the sea floor, and despite initial encouraging signs, it did not flow at commercial rates, instead producing a mixture of drilling brine, water, oil and gas.

The drill rig will now be moved to the Lincoln Crestal well – the second well of a three-well programme on the Greater Warwick Area, in which Hurricane has a 50% interest following Spirit Energy’s farm-in last September.

READ: Hurricane generates first revenues

“It is disappointing that the Warwick Deep well did not flow at commercial rates,” said chief executive Robert Trice.

“We were initially encouraged by hydrocarbon shows and gas ratio analysis indicative of light oil, however drill stem testing has clearly demonstrated that Warwick Deep cannot be considered suitable as a future production well and therefore the well will be plugged and abandoned.”

He added: “I look forward to commencing operations on the second well in the three-well programme, Lincoln Crestal. This is now the preferred candidate to be tied back to the Aoka Mizu FPSO, where Lancaster EPS production operations remain in-line with guidance.”

Analysts at SP Angel took encouragement from the Lancaster testing update, although they conceded that the Warwick Deep result was "disaapointing".

Peel Hunt was a bit more downbeat, stating: "Given Warwick Deep tests the same fractured basement reservoir interval as the Lancaster field (separated by the Brynhild fault zone), we see negative read across to reservoir quality risk in the Lancaster field."

Hurricane shares were down 18.3% to 42.9p in early-afternoon trading on Monday.

--Adds analyst comment and share price--

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Price: £0.48

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Market Cap: £945.36 m


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