North Sea oil exploration company Hurricane Energy has made what it describes as the “largest undeveloped” oil find so far in the UK’s waters.
Hurricane has proven its Halifax prospect and nearby Lancaster field are part of the same huge reservoir that could contain 1bn barrels of recoverable oil.
The company’s shares whipped up a storm after the announcement, climbing throughout the day to close up 8.76 per cent at 59p, up from a closing price of 54.25p per share on Friday. This time last year, Hurricane’s stock was worth around 11p per share.
In February, Hurricane said its initial 300m barrel estimate from the Lancaster field was too conservative and that it was expecting a “material uplift” in anticipated reserves.
An analysis of the Halifax well found a column of oil-bearing rock of at least 1,156m, which was described as “very significant”. The company had expected a prospect of a 700m oil column.
Production of the area, which is located around 60 miles west of Shetland, is expected to start in the first half of 2019.
Hurricane’s next step will be to procure funding to help it pay for an early production system, which is expected to require several hundred million dollars.
This could take the form of equity fundraising, debt fundraising or a partnership agreement with an oil major – or a combination of these.
“This is a highly significant moment for Hurricane,” said chief executive Dr Robert Trice. “I am delighted that the Halifax Well results support the company’s view that its substantial Lancaster discovery has been extended to include the Halifax licence. We believe that the Greater Lancaster Area is a single hydrocarbon accumulation, making it the largest undeveloped discovery on the UK Continental Shelf.”
Shetland, Highlands and Islands Member of Scottish Parliament Maree Todd said Hurricane’s find was “a significant discovery and a welcome reminder of the huge untapped potential that remains in Scottish waters”.
“Perhaps this welcome news for the industry might, at long last, spur the UK government into action in providing long overdue support for Scotland’s energy sector,” Todd added.