Hurricane's (LON:HUR) 2016 well programme aims to firm up volumes in Lancaster’s mapped structural closure, oil that Hurricane plans to monetise through a two-well EPS development. More clarity on volumes will support concept definition and should provide the basis for further farm-out discussions, taking the Lancaster field through to EPS first oil in 2019. Hurricane’s £52m fund-raise, announced on 18 April, was carried out at a 46% premium to market and will provide capital for the Q316 Lancaster 7 Wells drilling programme consisting of a multi-objective vertical pilot well and horizontal production test. Our RENAV for Lancaster, including net cash and net of corporate overheads, stands at 34p/share, down from our last published 47p/share as a result of fund-raising equity dilution, a 10$/bbl reduction in our long-term oil price assumptions and higher risk assigned to full field development volumes outside mapped structural closure.
High-spec rigs available at lower cost
Hurricane and Transocean Ltd (NYSE:RIG) have entered into a rig contract for the harsh weather, semi-sub Transocean Spitsbergen for the forthcoming Q316 drilling programme. We believe that current market dynamics have enabled Hurricane to contract the high-spec rig at an attractive day rate and at short notice. Final permitting and authorisation to drill are expected in the coming months, with a pilot well to be drilled this summer.