Crystal Amber23 Jul 2020 14:18
update from crystal amber Hurricane Energy plc ("Hurricane") Over the period, the company's Early Production System ("EPS") experienced an increased water cut. In one of its two wells, the 7z, production became unstable and had to be suspended. As a result, the company suspended its production guidance for 2020 of 17,000 net barrels per day for the year. Shares sold off as investors contemplated the potential impact on redeeming the $230 million convertible loan note in July 2022, in the context of capital projects over the next two years that may be required by the regulator. The EPS's electrical pumps have since been commissioned. Production has restarted on the 7z and combined production from both wells is now at 15,000 barrels per day. Production for the first and second quarters was at 14,900 and 14,300 barrels per day respectively. A number of remediation options are available to increase the EPS' production to the target 20,000 barrels per day. Hurricane replaced its Chief Executive in June. The company is now undertaking a reassessment of its reservoir model. This technical work is expected to take three months and conclude in time for the company's interim results in September. A potential outcome has been flagged: a shallower oil-water contact, which could explain the increased water cut. Whilst this would reduce the size of the reservoir, it would also eliminate the case for the commitment wells. This should reduce capital expenses and allow the company to focus on optimising the EPS. Over the quarter Hurricane's share price fell by 45.4%. HTTPS://storage.googleapis.com/crystalamber-com.appspot.com/_downloads/monthly-net-asset-value-2020-07-23.pdf
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