HUR.L Share News (HUR)

(Alliance News) - Hurricane Energy PLC on Friday said it has made changes to its work programme as part of its new five-year P1368 licence extension commitments.

Shares in Hurricane, which has its headquarters in Surrey, were up 6.2% at 32.06 pence in London in morning trade.

The company said it has obtained an extension for the P1368 licence, which is to the west of the Shetland Islands and contains the Lancaster and Lincoln oil fields. It will relinquish the Whirlwind and Strathmore sub-areas, located near P1368.

The licence extension carries with it the obligation to drill "certain commitment wells", which means changes to Hurricane's work programme. These commitment wells include a sub-vertical well or wells to determine the maximum extent of Lincoln in 2020 and to determine the maximum extent of Lancaster in 2021.

Because of its new commitments, Hurricane is no longer planning to drill any further horizontal producers in the Greater Warwick area - which contains Warwick and Lincoln - in 2020. Drilling is not likely to start before June 2020. Between February and June, the rig is likely to be idle while Hurricane seeks planning and permitting for its Lincoln commitment well, incurring a cost of up to USD10 million net to Hurricane. Hurricane is looking at alternative options for using the rig during the idle period.

Hurricane also is considering accelerating drilling at Lancaster to 2020 so as to make use of the available rig from Lincoln and minimise idle rig time.

In 2019, Hurricane is guiding for total production of 3.1 million barrels of oil, equivalent to an average rate of 13,300 barrels per day. Oil sales are to total 2.8 million barrels over seven cargoes and revenue generated is likely to be around USD165 million with year-end unrestricted cash to be approximately USD150 million.

The average production rate guidance for Lancaster in 2020 has been maintained at 20,000 barrels of oil per day, before operational downtime, though this will be reviewed under Hurricane's current testing programme.

Chief Executive Robert Trice said: "We are pleased to have extended the licence over the Lancaster and Lincoln subareas for a further five years. We anticipate having taken a final investment decision on full field development plans for both fields by the end of that period. The deep wells that now form part of our programme will target the delineation of the maximum extent of both the Lancaster and Lincoln oil columns to a more definitive level."

By Anna Farley; annafarley@alliancenews.com

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