() advanced on Monday rising over 12% at one point after expectation-beating analysis of the Lancaster project a fractured basement oil play in the West of Shetland region of the UK North Sea.
Having reported in June flow rates of almost 10000 barrels per day from a recently drilled well third party analysis has now indicated flows of up to 20000 barrels a day are possible.
The analysis demonstrated a very good quality reservoir Hurricane said.
Dr Robert Trice chief executive added he was delighted that Hurricane’s pre-drill geological model of the fractured basement has been confirmed while the key production metrics related to oil productivity were even better than expected.
"Such a level of productivity means that an early phase of field development and commercial production could be initiated with the addition of only one more horizontal well" he said.
Analysis also confirmed that the oil is 38 degrees API and consistent with that produced from previous Lancaster wells while the productivity index showed the well was capable of delivering sustained commercial flow under production conditions.
Tidal data which Hurricane added is very important also confirmed the intervening fractured basement rock as well as the seismic scale fault zones contributed to flow something that also corroborates the pre-drill geological model but demonstrated a highly permeable well connected fracture network.
As an additional boost the well also encountered an interval of previously undrilled oil-bearing Jurassic-Cretaceous sandstone though more work on this is required Hurricane said.
Cenkos analyst Ashley Kelty reckons Hurricane has “blown away” expectations with the Lancaster well testing results and the AIM share is now set for a major re-rating.
Kelty points in a research note out that with a current price of about 42p Hurricane is priced at a 60% discount to his price target of 103p.
The success revealed today provides the trigger for the share to close this gap he explains.
“We believe that this result dispels some of the markets concerns about the production potential of basement [plays] and would anticipate that the discount will unwind as the company moves towards the development of the Greater Lancaster Area.”
Kelty adds: “We believe these results are hugely positive for Hurricane and de-risk multiple development solutions alongside illustrating the potential offered by the basement play.
"Hurricane is unmatched in the sector in terms of exploration success having found more net resources in the UKCS than anyone else in the last 10 years.
"With a 100% interest in all licences and over 400mmboe [millionsof barrels of oil equivalent] of resources this excellent detailed well result will both excite and encourage potential industry partners (who have been keenly waiting for this result).”
Oil stock expert Malcolm Graham Wood meanwhile was in bullish mood following the well testing results foreseeing a significant increase in recoverable reserves from Lancaster and saying Hurricane chief Dr Robert Trice was “right about basement plays after all.”
Trice founded Hurricane with a clear strategic goal: to prove that fractured basement oil fields - which have been developed effectively in Vietnam Libya and Yemen - not only existed in the North Sea but that they could operate economically.
The analysis revealed today proves that the Lancaster reservoirs can flow at commercially viable rates and in fact fall in a range that is likely to be attractive to larger oil companies.
In a note Wood said: “Much speculation has always centred around possible industry partners and I understand that the data room is to be re-populated with this information and will open in early October.
“This gives the company the scope to consider all funding options and indeed select the best solutions for what is going to be a very exciting development even the naysayers might find it difficult to grumble now.”
-FIRST PUBLISHED SEPTEMBER 15-
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