UK’s Hurricane Energy has conditionally raised funds for its exploration campaign in the North Sea, west of Shetland Islands.
The company on Monday said that £52.1 million would be raised through a proposed issue of 347,245,265 New Ordinary Shares at a price of 15 pence per share, subject to shareholders’ approval.
Kerogen Investments, has subscribed for 293,911,931 of these New Ordinary Shares to raise gross proceeds of approximately £44.1 million.
The remainder of the New Ordinary Shares have been conditionally placed with two other institutional investors, Crystal Amber and Marlborough Fund Nominees, to raise gross proceeds of £8.0 million
The money raised will be used to fund the Lancaster 7 wells, with the first well expected to be spudded in early third quarter of 2016, using the Transocean Spitsbergen semi-submersible drilling rig.
The drilling project calls a Pilot Well and a Horizontal Sidetrack Well, designed to refine the Lancaster Contingent Resource range (currently 62 – 456 MMboe), provide a second future production well and provide new information to help optimally plan the Lancaster field development.
In the meantime, Hurricane said it was in talks with several parties regarding a possible farmout of stake in Lancaster.
Dr Robert Trice, Chief Executive, said: “We are delighted with the investment by Kerogen and certain existing Shareholders which places Hurricane in a position to drill, test and evaluate two new wells on Lancaster this year. The Pilot Well is designed to determine our Lancaster Contingent Resource ranges ahead of any field development decision. The Horizontal Sidetrack is intended to establish flow rates that are at least similar to our 2014 horizontal well productivity as well as providing the remaining well stock for the EPS phase of development. “
He said that the successful completion of the two operations would enable “us to advance the development of one of the UK’s largest yet to be developed fields.”
“To be able to progress to this point, whilst retaining a 100% interest in all our assets, is a tremendous accomplishment and can only aid our continuing farm-out discussions which are progressing well,” Trice said.
Jason Cheng, Co-Founder and Managing Partner of Kerogen Capital, commented:“Our investment in Hurricane underlines our confidence in the long-term potential of the North Sea and our continued commitment to the oil and gas sector in the current market environment. Hurricane represents an outstanding opportunity for Kerogen to participate in the exciting fractured basement play by gaining exposure to the future development of the Lancaster oil field and prospective adjacent areas. We look forward to partnering with the Hurricane team in the critical next stage of the Company’s development.”
Hurricane said its directors believe that drilling the Lancaster 7 Wells in 2016 should enhance the company’s ability to negotiate attractive farmout terms as well as provide an advantageous environment for achieving the earliest date of first oil on Lancaster.
Subject to a success of the Lancaster 7 wells, Hurricane Energy expects it could make a final investment decision to progress the EPS phase of development on Lancaster, which is expected to involve tying back two horizontal wells to an FPSO host facility, in H1 2017.
Assuming a suitable FPSO can be sourced, the directors believe that first oil could be in the first half 2019, Hurricane Energy said.