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Corporate
Sufficient information since First Oil has been gained for Hurricane to provide forward production guidance of 18,000 bopd net for the time being, but the Company acknowledges that the current macroeconomic environment and health situation could impact Hurricane's ability to operate as planned, and there is still much to learn about reservoir performance. Q1 production averaged 14,900 bopd due to ongoing individual well testing and gradual ramp-up to the 20,000 bopd target rate (excluding downtime). Forward guidance of 18,000 bopd therefore equates to an average expected net production rate for 2020 of approximately 17,000 bopd.
While EPS operating costs of $17/bbl combined with a strong current cash balance of $152 million (unrestricted cash at 1 April 2020), provide a relatively robust financial footing at present, the Company is conscious of current macroeconomic circumstances, with oil prices having recently hit historic lows. A sustained period of very low oil prices or unexpected operational difficulties related to COVID-19 will increase pressure on its finances.
Before the COVID-19 crisis developed, the Board had agreed a capital allocation framework designed to:
· maintain healthy minimum levels of cash;
· allocate cash flow from operations towards further strengthening of the balance sheet;
· meet future financial liabilities;
· strictly control capital spending focussed on licence and contractual obligations;
· facilitate returns to shareholders at the earliest appropriate time in the future; and
· consider other drilling options, only if maximising shareholder value uplift at minimum cost.
If the current oil price environment persists for some time, this would create challenges in meeting capital allocation goals in full. The Board will consider what additional measures may be prudent as the situation unfolds.
The future capital programme also depends on ongoing discussions within the GWA JV, and the outcome of the recent request to the regulatory authorities for a field determination over Lincoln. Further updates will be provided to the market once the cost of future capital programmes has been confirmed.
The results of the wells in the 2019 drilling programme are still undergoing analysis, but conclusions drawn so far include:
· GWA productivity is materially less than Lancaster, illustrated by lower drilling mud losses, lower flow rates and lower productivity indices;
· there is a difference in the fault zone characteristics in the GWA compared to Lancaster;
· the GWA basement appears to have less well-developed reservoir qualities compared to Lancaster; and
· the Lincoln Crestal well successfully produced at 9,800 bopd using an ESP and exhibited a dual porosity fracture response similar to Lancaster, however the productivity index was materially lower than at Lancaster.
The above observations point to the GWA basement having less well-developed reservoir qualities compared to Lancaster, and better understanding of the control on these properties will require further wells and data. The planned licence commitment well is an important data point to this end.
Though different to Lancaster, the GWA JV is sufficiently encouraged by the 2016 and 2019 well results on Lincoln to consider the discovery commercial for development. The GWA JV is therefore seeking a field determination at Lincoln for the purpose of progressing a field development incorporating a single well tie back to the Aoka Mizu of either the Lincoln Crestal well or an alternative shallower producer.
Based on existing consents, the Lincoln Crestal well is planned to be plugged and abandoned later this year. The suspension consent, which provides the deadline for this activity, has been extended from 22 June 2020 to 30 September 2020, due to the ongoing COVID-19 pandemic. This extension also allows for the gathering of additional long-term pressure data which is expected to provide further insight into the dynamic behaviour of the Lincoln reservoir. The Transocean Paul B. Loyd Jr. semisubmersible rig, which remains under contract, is currently stationed in the Cromarty Firth and is expected to carry out this activity, although the GWA JV are also reviewing a number of alternative rig options.
Hurricane is assessing a number of options for next steps at Lancaster. Prior to recent oil price declines, the Company was evaluating the potential to drill and tie back an additional production well (the "L8 well") to not only increase production but also provide data to help de-risk the Company's volumetric model. Another consideration is the potential to re-enter the 205/21a-7Z well and isolate the heel, with the objective of accessing a more productive zone and reducing the interference impact with the 205/21a-6 well. Successful isolation would have the benefit of increasing productivity without requiring the drilling of a new well or of making a significant investment in new subsea infrastructure that a new well would require. Whilst these two options continue to be reviewed in light of the oil price and Lancaster EPS performance, next steps are currently confined to:
· continuing the existing testing plan on the two Lancaster EPS wells;
· a volumetric review including a CPR in early 2021, reporting reserves and resources as at 31 December 2020;
· the Lancaster licence commitment well in 2021; and
· the decision to proceed into the next phase of the Aoka Mizu FPSO contract.
It had been planned to commission the electrical submersible pumps during Q2 2020, but COVID-19 restrictions requiring manning levels to essential personnel only have delayed this programme. These pumps are not currently required to maintain production levels, though their testing and commissioning remains a project aspiration for 2020.
Greater Warwick Area
The three well 2019 drilling campaign completed in joint venture with Spirit Energy Limited ("Spirit Energy") ("GWA JV") materially increased our understanding of this part of the Rona Ridge. While the 205/26b-14 ("Lincoln Crestal") well produced oil at 9,800 bopd using an electric submersible pump ("ESP"), the other two wells had significantly poorer outcomes.
After retrospectively analysing the drilling and petrophysical data with the benefit of the EPS data the following conclusions have been drawn:
· a 10m high permeability water bearing zone has been identified within an interpreted 40m producing interval in the 205/21a-7Z well;
· a 10m water zone has also been identified in the 205/21a-6 well, however this water zone is more distant from the interval currently producing;
· produced water from the 205/21a-6 well is therefore interpreted as being drawn from the perched water zone intersected by the 205/21a-7Z well; and
· current individual well water cuts of approximately 46% in 205/21a-7Z and 7% in 205/21a-6 during April are consistent with this revised interpretation, noting that the 205/21a-7Z figures were impacted by high water cuts immediately after a shut-in at the start of the month.
The behaviour of produced water combined with the drilling and petrophysical data has led to an interpretation that the water produced by the Lancaster EPS is being sourced from a zone of 'perched' water. Perched water is isolated from the underlying aquifer and therefore has a finite volume relative to the life of the field. The perched water model would imply that once a constant production trend has been set, water production levels should stabilise over time and may eventually decline. In the meantime, the Aoka Mizu FPSO's facilities have the capacity to safely process the produced water and the current water cut is not affecting the vessel's ability to deliver oil production.
More data and time are required before the Company can confirm or challenge published resource ranges, considering the complex dynamic behaviour of the Lancaster fracture system. Nonetheless, after production of over 4.7 million barrels and observation of related bottom-hole pressure trends, an initial assessment of the minimum connected reservoir volume that is being 'seen' by the wells at the present time can be made using simple material balance techniques. These techniques cannot provide unique answers at this stage however, recent pressure decline trends are consistent with a minimum in-place volume of around half a billion barrels. This suggests that the wells are obtaining more pressure support with increased production, progressively 'seeing' more of the reservoir. This additional pressure support is attributed both to connections with more distant volumes of the reservoir, and slower feed-in from micro-fractures within the dual porosity system. The net effect is that the wells are accessing more volume with time, and have yet to reach a stable decline rate from which ultimate reservoir size can be estimated.
Hurricane is assessing a number of options for next steps at Lancaster. Prior to recent oil price declines, the Company was evaluating the potential to drill and tie back an additional production well (the "L8 well") to not only increase production but also provide data to hel
· Lancaster EPS - Operational performance
o Aoka Mizu FPSO delivering excellent availability - average of 96% since start-up
o Flow assurance considerations have been effectively managed allowing an extension in pigging frequency and corresponding increased uptime
o COVID-19 impacts managed without significant operational disruption to date, but risks will remain as long as the pandemic is in an active phase
· Greater Warwick Area
o GWA JV is seeking a field determination at Lincoln
o Lincoln Crestal well suspension consent deferred until 30 September 2020
· Corporate
o Average production of 14,900 bopd achieved during 1Q 2020
o Average production of 18,500 bopd achieved during April 2020
o Updated production guidance of 18,000 bopd for balance of 2020 (average for the year of approximately 17,000 bopd)
o Low operating costs of $17/bbl at current production rates and oil prices
o Capital allocation framework incorporated into future plans for capital expenditure and balance sheet management, reflecting current macro-economic environment
Lancaster Early Production System
The Lancaster Early Production System ("Lancaster EPS") started production through the Aoka Mizu FPSO in May 2019. Due to commissioning activities, unplanned shutdowns and subsurface testing, approximately 5 months of steady production data has been obtained so far, and reservoir behaviour has been more complex than anticipated. A more extended period of steady production is therefore required to confirm the validity of Hurricane's geological model and define reservoir characteristics sufficiently to consider the next stages of development.
So far, well productivity is world-class, with each well exhibiting an initial productivity index (PI) in excess of 200 stb/d/psi. To provide context, the Saudi super-giant Ghawar field is reported to have had initial PIs of c. 140 stb/d/psi. This productivity is particularly impressive when considering both wells are interpreted as producing from a limited section of the horizontal borehole length close to the heels of the wells.
This well productivity is consistent with the Company's model of a dual porosity system comprising highly permeable fractures, connected to a pervasive 'background' permeable fracture network. However, whilst the wells show high performance individually, their proximity, and associated interference behaviour, requires further data acquisition before the Company can be confident about optimum long-term well rates.
Having not observed water during initial drill stem testing of the two Lancaster EPS production wells, significant water production had not been expected during the EPS phase. Water production has been steadily increasing since production started, with an aggregate water cut of approximately 26% during the month of April (1st - 21st) whilst producing an average of 18,500 bopd (net of downtime).
Hurricane Energy plc, the UK based oil and gas company focused on hydrocarbon resources in naturally fractured basement reservoirs, provides an operational update ahead of its Capital Markets Day presentation via webcast at 10:00 a.m. today.
The webcast can be viewed via a link which is available in the Investors section of the Company's website at https://www.hurricaneenergy.com.
Dr Robert Trice, Chief Executive of Hurricane, commented:
"I look forward to providing an update to the market via webcast later today. As expected, the past year has proved to be transformational for Hurricane. We recognise the challenges in the market environment currently but are pleased to report on our continued good production performance at Lancaster.
"With a significant unrestricted cash balance of $152 million as at 1 April 2020 and low operating cash costs of $17/bbl, the current oil price does not pose an immediate threat to the Company as we continue our data gathering programme at Lancaster. However, it does limit options for capital expenditure on additional operational phases. Our capital allocation framework has been revised to account for the current market environment and is focused on retaining a strong cash balance whilst meeting our licence and joint venture commitments.
"The Lancaster wells have demonstrated very high productivity, despite some unexpected production of what we are confident is 'perched water', and we continue our testing programme at a combined rate of up to 20,000 bopd with the objective of evaluating sustainability and long-term trends at this target rate. It will take more time to confirm the long-term potential of the reservoir, and our operations may be impacted by measures related to the COVID-19 pandemic and the resulting macroeconomic situation. However, we have sufficient confidence, based on data obtained to date, to provide current forward guidance of net 18,000 bopd."
Highlights
· Lancaster EPS - Data gathering
o Data gathering programme a resounding success to date
o Individually the wells can produce at rates in excess of 10,000 bopd
o Current testing targets a combined rate of up to 20,000 bopd (excluding downtime) with the objective of evaluating sustainability and trends at this target rate
o Water production behaviour continues to suggest that the 'perched water' model is the most likely interpretation
o Initial material balance analysis indicates a minimum of half a billion in place barrels being 'seen' by the current wells
o Production is interpreted as being confined to the heel of both wells - Hurricane's analysis of well data suggests that significantly more permeable and potentially higher productive zones are present further along both well bores, indicating that the potential productivity upside of these wells has yet to be tested
· Lancaster EPS - Operational performance
o Aoka Mizu FPSO delivering excellent availability -
Hurricane Energy plc, the UK based oil and gas company focused on hydrocarbon resources in naturally fractured basement reservoirs, announces that electronic copies of its Annual Report and Group Financial Statements for the year ended 31 December 2019 ("Annual Report") have been published today in the Investors section of the Company's website at www.hurricaneenergy.com.
Appointment of Director of Regulatory Affairs
Eden Research plc (AIM: EDEN), the AIM-quoted company focused on sustainable biopesticides for use in global crop protection, animal health and consumer products industries, today announces the appointment of Dr. Michael Carroll as Director of Regulatory Affairs.
Mike is a leading figure in the field of crop protection products development and registration. He brings international experience to the team having worked in the UK, Germany, Belgium and the USA, with over 30 years' experience gained in the agrochemical industries. Mike served tenures of over 10 years at both Dow AgroSciences and Monsanto Agricultural Group, holding the various positions including Global Registration Manager and European Registration Manager. At Monsanto and Dow AgroSciences, Mike's responsibilities included the global launch of herbicides and fungicides, experience which will be highly relevant as Eden executes on plans to expand its product offering.
More recently, Mike served as Head of Research and Development for Arysta EMEA, the largest region in Arysta LifeSciences. He was responsible for early stage development and registration of new formulations, the defence of existing active substances, chemical and biosolutions, and ensuring REACH (Registration, Evaluation, Authorisation and restriction of Chemicals) compliance in Europe. For the past year, Michael has been working for TSG Consulting (AIM:SAG) an AIM-quoted Science Group company that provides regulatory and scientific support to chemical companies around the world.
Mike holds BSc and PhD degrees in biochemistry from the UK universities of Bath and London, respectively, and throughout his career has shown interest in how local politics ultimately controls the regulatory process. Mike is a frequent speaker and published author, regularly participating in Informa Ag Chem and Generics speciality conferences and British Crop Production Council conferences. In 2019, he presented at both of these events on the topic of "The EU General Food Law and Transparency".
CEO Sean Smith commented: "Mike is a key appointment that further demonstrates our focus on building a high-calibre team around the core functions within our business. He brings significant capabilities to the Company in the critical areas of product registration and regulatory compliance. Mike has a wealth of international experience which has given him invaluable expertise in product registration globally. Mike comes with a long track record of driving successful regulatory outcomes in the crop protection industry, a network of key industry influencers, and experience in senior roles at industry leaders such as Dow AgroSciences and Monsanto. We are pleased to welcome him to Eden."
Whilst water production rates have materially increased since start-up of the Lancaster EPS, Hurricane's interpretation of water behaviour data has continued to support the Company's perched water model. Although it is not possible to predict future changes in water cut at present, the combination of high productivity wells, potential for currently unused production support from ESPs, and water handling capacity of the Aoka Mizu FPSO give the Company sufficient confidence to maintain its forward guidance at 18,000 bopd, net of 10% assumed downtime."
Q1 2020 Production
Hurricane Energy plc, the UK based oil and gas company focused on hydrocarbon resources in naturally fractured basement reservoirs, provides an update on production from the Lancaster Early Production System ("Lancaster EPS").
Lancaster EPS Quarterly Production Update
Q4 2019
Q1 2020
Oil Production
Million barrels
1.1
1.4
Oil Rate
Barrels of oil per day (bopd)
11,800
14,900
Average Water Cut
% total fluids
10%
17%
Hurricane completed a prolonged individual flow test on the 205/21a-6 well at the end of January, then reverted to producing from both wells at progressively increasing rates in February. In March, the combined production rate was increased to approximately 20,000 bopd comprising 12,000 bopd from the 205/21a-6 well and 8,000 bopd from the 205/21a-7Z well, before downtime. This recent oil production rate has been associated with approximately 6,000 barrels of water per day, predominantly from the 205/21a-7Z well. The overall water cut for the quarter was approximately 17%. This level of water production is well within the capacity of the Aoka Mizu FPSO's installed water handling facilities.
These production rates have been achieved without the use of electrical submersible pumps (ESPs) and with the wells choked back to less than 50%, confirming the extraordinary productivity of these wells and the reservoir.
There were three cargo liftings from the Aoka Mizu FPSO during the quarter. On 3 April 2020, the eleventh successful crude lifting took place taking total oil sales from the Lancaster EPS to 4.4 million barrels of oil.
Capital Markets Day 2020
On 24 March 2020, the Company announced its Capital Markets Day had been postponed owing to restrictions on movement implemented in the UK in response to COVID-19. The Capital Markets Day presentation is now planned to take place on 27 April 2020, via webcast. A link to view the presentation will be provided on the Company's website: www.hurricaneenergy.com/investors.
Dr Robert Trice, Chief Executive of Hurricane, commented:
"We are very pleased with the performance of the Lancaster EPS in Q1 2020. As at the end of March, the EPS has safely produced approximately 4.4 million barrels of oil since starting up last year. Despite the significant scale of these produced oil volumes, the Lancaster EPS is still very much in a data gathering phase, as we continue to better our understanding of this unique basement reservoir. Further testing at the current rates will be required before any trends can be confirmed and conclusions made about the long-term behaviour of the reservoir. Once trends have been established, it is anticipated that alternative combinations of well rates may be tested in order to establish the optimum long-term production configuration for the two wells.
"Whilst water production rates have materially increased since start-up of the Lancaster
Hurricane Energy plc confirms that a crew member on the Aoka Mizu floating production storage and offloading vessel ("FPSO") at the Lancaster field has been evacuated to the mainland for medical reasons and subsequently tested positive for COVID-19.
The evacuated individual was transported onshore by an HM Coastguard helicopter and is now receiving medical treatment.
Hurricane is supporting Bluewater Lancaster Production (UK) Ltd ("Bluewater"), installation operator of the Aoka Mizu FPSO, with its response. Bluewater is working within the guidelines provided by NHS Scotland, Health Protection Scotland, and Oil and Gas UK in determining the next steps. Production operations at Lancaster have not been affected.
""Overall it was as good as we could have hoped for."
Personally I do not agree ash66, these results are far far better than I had expected, you see I expected our production cost per barrel as far higher than it is, for once I had miscalculated with the correction being for the better, I don't think anyone thought our costs were as low as $17 per barrel.
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That's pretty much what I meant.
Overall it was as good as we could have hoped for.
"We hope to receive this soon" would have helped.
Are we really going to lose Lincoln Crestal?
https://www.investegate.co.uk/hurricane-energy-plc--hur-/rns/final-results/202003190700077172G/
If it hasn't already been mentioned it is quickly dying out in China
One day last week I heard a figure for was just 8 new cases.
I see Reabold has also issued a, "no problem" statement.
I don't expect to hear from HUR :(
So they wait for the price to plummet to raise £10 million @6p.
They say, "Eden has been making good progress with the commercialisation of our products and technologies..."
Not as far as the SP is concerned and they have done nothing for the shareholders.
https://www.investegate.co.uk/eden-research-plc/eden/placing--subscription---open-offer/202002281335425376E/?fe=1&utm_source=FE%20Investegate%20Alerts&utm_medium=Email&utm_content=Announcement%20Alert%20Mail&utm_campaign=Eden%20Research%20plc%20Alert
Main part:
Eden Research plc (AIM: EDEN), the AIM-quoted company that develops and supplies breakthrough biopesticide products and natural microencapsulation technologies to the global crop protection, animal health and consumer products industries, today announces that it has conditionally raised £10.1 million (before expenses) by way of a Placing and Subscription of new Ordinary Shares at the Issue Price of 6p per share to certain institutional and other investors. Furthermore, to enable other Shareholders not able to participate in the Placing an opportunity to subscribe for additional Ordinary Shares, the Company is proposing to raise up to an additional £0.5 million (before expenses) by way of an Open Offer made to Qualifying Shareholders of up to 8,287,573 new Ordinary Shares at the Issue Price.
Eden is currently the only UK-quoted company focused on biopesticides for sustainable agriculture and is well positioned to capitalise on the rapidly growing biopesticides market, which is projected to be worth over £10 billion by 2025. The Company expects to apply the net proceeds of the Fundraise to advance the development, registration and commercialisation of new key product categories, including new insecticide formulations and seed treatments.
Transaction Highlights
· Placing of 151,666,834 new Ordinary Shares at the Issue Price with new and existing investors to raise £9.1 million (before expenses)
· Subscription for 16,666,500 new Ordinary Shares by Sipcam Oxon S.p.A. at the Issue Price to raise in aggregate £1.0 million (before expenses)
· Open Offer to Qualifying Shareholders at the Issue Price to raise up to an additional £0.5 million (before expenses)
· The Directors intend to use the net proceeds from the Fundraise for the following purposes:
o c. £6.0 million to develop and commercialise the Company's first insecticide products and seed treatments; and
o c. £2.0 million to develop use of Sustaine ä with traditional agrochemicals; and
o c. £2.0 million to expand the Company's product portfolio in seed treatments, broad-acre crops and the home and garden market.
The Company will shortly be posting a Notice of General Meeting and an accompanying circular (the "Circular") to existing shareholders following this announcement. All relevant documents will be available to download at https://www.edenresearch.com/ .