The well flows at 11,000 barrels of oil per day and encounters a 620 metre oil column. Hurricane now believes the field contains significantly more than its previous estimate of a 200 million barrel contingent resource.
Hurricane reported a successful flow test on Lancaster in June 2014, shortly before the collapse in crude oil prices. The 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.
We reported in June how Hurricane had decided to delay a planned farm-out of a portion of its interest in Lancaster until after this summer's drilling programme. It was in a position to fund this activity thanks to a £52.1 million premium priced placing in April. Participants in that fundraise would be sitting on paper gains of more than 150% at the current price.
The next plan is to drill a horizontal well which is intended to act as a future production well once the field is fully on stream.
Broker Cantor Fitzgerald which has 'buy' recommendation on the stock and a now seemingly out of date price target of 26p comments: 'We believe that Hurricane’s Lancaster development is one of the largest and most interesting projects on the UKCS at present. Its 2C contingent resource dwarfs the average discovery on the UKCS of c.20-30MMboe, and we are encouraged that the company has refined its development plan to give early production for reduced capex.'