At a time when many of its peers are struggling just to stay afloat UK oil firm Hurricane Energy (HUR:AIM) is up 26.8% to 12.75p after raising £52.1 million at a premium to fund two wells later in 2016.
The funding shows the willingness of private equity to invest in a bombed out sector with Kerogen Capital putting up £44.1 million of the fresh cash and taking a 29.9% stake. Institutions Crystal Amber and Marlborough Fund Nominees account for the other £8 million. The money is being raised at 15p – a 46% premium to Friday’s close of 10.25p.
The company should now be able to progress ongoing farm-out discussions from a position of strength. The planned drilling on the Lancaster discovery, West of Shetland will aim to narrow estimates of the field’s contingent resource – of between 62 million and 456 million barrels of oil equivalent - and confirm production rates from any future commercial development.
Hurricane reported a successful flow test on Lancaster in June 2014, shortly before the collapse in crude oil prices and the fundraise should help the company achieve first output in the first half of 2017.
This find is located in a fractured basement reservoir, a largely untapped source of hydrocarbons beneath the sandstones which have accounted for the majority of the UK’s historic oil production. Yemen, Libya and Vietnam have successfully exploited fractured basement reservoir potential and Hurricane is aiming to repeat the trick closer to home.