HURRICANE Energy has seen a sharp fall in its share price after it warned that production could be reduced or ceased altogether at the Lancaster well, amid uncertainty around the reservoir's “bubble point”.
The West of Shetland-focused company said it has benefited from higher than expected oil prices and the performance of its floating production system in the update to the London Stock Exchange.
It said that, based on current trends, management estimates that wellhead flowing pressure in the flagship Lancaster reservoir may reach the bubble point - the point at which gas is liberated from oil within the reservoir - by the end of the first quarter of next year, which it said is consistent with the time range it outlined in May.
“Whilst this has been factored into the guidance for the period, there will remain a degree of uncertainty regarding the full impact of this, along with the risk that gas liberated from the reservoir could be produced which could result in production either being reduced or ceased altogether.”
Antony Maris, Hurricane chief executive, said the performance of its floating production system was excellent, adding: "As a result of the combined efforts of the Hurricane and Bluewater teams, we anticipate being towards the upper end of our production guidance for 2021 and this is also reflected in our guidance for the next six months to March 31, 2022."
Shares in Surrey-based Hurricane, which sold for 60p in 2019 after the company started production from the Lancaster field, closed at 3.93p, down 15 per cent, or 0.72p.
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