Report

Initiation: Pioneering fractured basement

Hurricane Energy is an E&P company focused on fractured basement in the UK, where it has de-risked its 207mmboe Lancaster field with a successful horizontal appraisal well (flow rates of c 10mb/d constrained by surface equipment). Management is now envisaging an Early Production System to answer remaining uncertainties and reduce upfront capital requirements. The company is currently seeking a farm-out to fund an EPS, targeting first oil in late 2017, with full field production five years later. While the farm-out market is currently subdued, Lancaster may attract interested parties due to its high well deliverability and relatively simple development scheme. Furthermore, success at Lancaster could lead to a wider de-risking of basement plays – opening up a much larger resource base. In these circumstances, our RENAV of 45p/share could have considerable upside, although we note that the terms of the farm-down and performance of any EPS are critical.
Underlying
Hurricane Energy Plc

Hurricane Energy is engaged in the exploration of oil and gas reserves principally on the U.K. continental Shelf. Co.'s acerage is focused on the Rona Ridge, West of Shetland.

Provider
Edison Investment Research
Edison Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.

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