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As I look from my breakfast table I can see family photos of my Father who was a North Sea Exploration Director in the pioneer days, so you could say that oil runs through Chrisoil blood. I’ve always tried to put the knowledge gleaned from Dad and the City over the years to good use, which has included bagger north sea companies such as Encore, Nautical, however none are as Xciting, excuse the pun, as Hurricane Energy (LON: HUR) A North Sea, West Shetland based company with multi-bag potential.
Last week I managed to catch up on meetings regarding the Company. The following is the conclusion of a once in a blue sky investment or as Man City call it “A blue moon investment.” No other oily has a 90% Chance of Success (COS) with economic COS at 60%. This is a fully funded, light oil, liquid investment with strong TA positions pointing towards £1. A view which is also held by Malcolm Graham Wood on his Oil blog. Other tipsters/writers are also becoming bullish.
Hurricane has attracted a big investment by a major oiler. BP. Who are the ONLY big company I’ve ever heard of investing in an oily DIRECTLY. Even in the Xcite Energy days BP was in an oil off take agreement. This is important, firstly it derisks the geology of the play, secondly it derisks farm out and guess what is nearby? The BP operated Clair field which has full infrastructure. So there will be no costly two year farm out here on success. However, I’m sure interested parties will look and may farm in.
Right now the Company estimates recoverable contingent resources across its West Shetlands portfolio at 450,000,000 barrels of oil. Their CEO Robert Trice hopes to use subsea wells tied to a floating production, storage and offloading (FPSO ) vessel. It’s all in shallow areas, unlike most of the West Shetlands. In the short term the Lancaster prospect 207 contingent 100% interest 38% API light oil could unlock up to 8,000 barrels a day in flow test ,however anything over 3000 is positive.
Unlike normal oilies Lancaster has found oil and has flow tested on the edge vertically at 2500 barrels. This will mainly be a Horizontal well at the hottest point.
Make no mistake WHEN this comes in Lancaster will open up the Lincoln Prospect just six miles north which could see a combined giant development called “The Greater Lancaster Area Project” which could come in at a 2C combined 350million barrel play. However CEO,Robert Trice, has mentioned that their acreage alone could have “something like 3 billion barrels in places already identified. Its the new frontier” Remember Typhoon and Whrilwind add to these interests.
Geology fractured basement plays have been proven In Vietnam, Libya and Yeman this geology occurs when volcanic activity forces a basement up as much as 1.5 kilometres resulting in an oil baring layer, the granite faults and fractures host the oil leading to significant oil in place numbers. I would expect that there’s say there is more oil to be explored on Lancaster prospects deeper zones.
Drilling on Lancaster has already begun. News flow is due in the summer backed by the state of art Transocean Sedco 712 which reduces operational risk.
Top management include Dr Robert Trice CEO a world leader in fractured basements. John Hogen Chairman 35 years in the oil and gas Industry with Lasmo. Nicholas Taylor. 30 years in the oil & gas industry. He has been with Hurricane since 2005 as the Chief Financial Officer and has had senior finance roles with Total operating in the UKCS and was Finance Director of Carless operating in the UK and US.
From a tax point the government has opened up some new advantages recently so this should also increase industry excitement.
Cenkos wrote that Hurricane shares are some 82% below their risked Net Asset Value. This works out at $0.48 approx. 28p. Sector peers Cairn $2.42. Faroe Petroleum a tiny tiddler in 2c contingent $4.46. On a trading front F&C has bought the entire overhang from IPO. So get researching its not too late but the clock is ticking!
So I come to the end of breakfast at the the castle until the next time. ….. More video interviews and research notes can be found on @Chrisoil Twitter