Hurricane Energy plc said that the well gauge pressure reached and declined below the ‘bubble point’ during December without production issues at its Lancaster oil field, west of Shetland.
OPERATIONS
The company added that this was in line with the previous guided timing of between late December 2021 and mid-February 2022.
The bubble point is defined as the pressure at which the first bubble of gas appears at a specific temperature.
In a trading report, Hurricane recorded production for Q4 2021 at an average 10,000 bopd, within guidance.
For the year ended 31 December 2021, production was 3.7 MMbbls (average of 10,267 bopd) with oil sales of 3.6 MMbbls across seven cargoes.
FINANCES
For the year ended 31 December 2021, Hurricane recorded an increase in revenue of $239 million (2020: $180m).
The company’s year-end debt stands at $78.5m following repurchase of $151.5m of outstanding convertible bonds for cancellation during H2 2021.
Hurricane held net free cash of $50m with year-end net debt of $28.5m
NEXT CARGO
As of 15 January 2022, Lancaster was producing c.9,650 bopd from the P6 well alone with an associated water cut of c.39%.
The next cargo of Lancaster crude is anticipated to be lifted towards the end of January 2022.
| December 2021 Lancaster Field Data | P6 | P7z(3) |
| Oil produced during the month (Mbbls) | 293 | – |
| Average oil rate (bopd) | 9,460(6) | – |
| Water produced during the month (Mbbls) | 178 | – |
| Average water cut(4) | 38% | – |
| Well gauge pressure (psia)(5) | 1,603 | – |
fluid (oil and water) production. 5. Pressure reported is the monthly minimum from well downhole gauge (Hurricane Energy)
DEBT
“Despite the major challenges faced by Hurricane last year, the team has done a superb job at delivering excellent production performance and high uptime on the FPSO, as well as finding cost savings,” said chief executive Antony Maris.
“Oil prices, while volatile, have been stronger in the second half of the year and, combined with the impact of the bond buybacks, production performance and cost reduction measures, we are optimistic that the ability to repay the bonds in full at maturity is now within reach.
“Given our current prediction of performance and assuming oil prices continue to be within the range experienced over the past month, we believe that post clearing our bond debt Hurricane will have between $8-38 million of net free cash at the end of July 2022.”
BLUEWATER
Mr Maris added that the company would need the cash to cover any subsequent working capital requirements until revenue was received from the next lifting.
“The amount of net free cash will also be reduced by the level of escrowed cash that Bluewater, our FPSO provider, requires as part of any extension deal.
“We continue to engage with Bluewater and remain optimistic of finding a mutually acceptable deal that will enable the company to continue production beyond repayment of the bond.
“As such, going forward we are working hard towards ensuring a confident future for Hurricane based upon a sustainable financial platform.”