Hurricane Energy beats production expectations at Lancaster field

Hurricane Energy on Monday reported that initial output from its wholly-owned Lancaster Early Production System was above expectations.

The UK based oil and gas company said the offshore field located to the west of the Shetland Islands has delivered an average of 14,400 barrels of oil per day since first oil was lifted in early June until 17 August, with 1.2m barrels of oil sold over three cargos.

These results were achieved even as production was constrained by the use of only one of two subsea flowlines, though operations have now recommenced with both flowlines.

Robert Trice, chief executive of Hurricane, said: "We are delighted to provide an update on Lancaster EPS progress and to communicate that our production levels have been above expectations for this early phase of operations. However, despite these promising results, we remain cognisant that it will take up to a year to acquire and interpret sufficient performance information to test our reservoir model of the field."

Meanwhile, drill stem testing has now begun at Lincoln Crestal, also located to the west of the Shetlands, following the completion of drilling to a total depth of 1,780 metres and initial spudding on 12 July.

Finally, the AIM traded company maintained its production guidance for the second half of 2019 at the aggregate level, forecasting approximately 11,000 bopd based on previously advised expected system availabilities of 45% in the third quarter and 65% in the fourth.

Analysts at Berenberg said: "Production is averaging above the company’s expectations 2.5 months into production. This is an encouraging start. We will need to monitor production for at least another five months or so before making any conclusions about the production potential of Hurricane’s assets and about the fractured basements more specifically. We rate Hurricane a 'buy' with a price target of 100p."

Hurricane Energy shares were down 1.69% at 42.98p at 1232 BST.