In a press release issued by Hurricane on Friday last week, the company announced that it has extended the lease of Bluewater’s Aoka Mizu FPSO which is currently stationed at Lancaster, West of Shetland. The expiry data of the current contract is 4th of June this year.
Against a backdrop of high oil prices and a production profile that doesn’t show a major decline yet – in January production was still north of 10 kboe/d – it is no surprise that the company wants to stay at Lancaster longer.
Antony Maris, Chief Executive Officer of Hurricane, even said in the statement: “This is an important moment for the Company. Against the backdrop of our demonstrable operational track record, financial discipline and the significant rise in oil prices, we are preparing Hurricane for the future. The UK Government’s renewed emphasis on security of supply is welcome. We are working hard to identify how best to optimise capital allocation in future activities to build further value for our shareholders, whether through further investment in our existing portfolio, or in new opportunities in the UK oil and gas sector, or both.”
Realising that the company had to swallow huge losses when the resource base for Lancaster had to be reduced significantly, with an associated share price fall that saw lots of investors lose major amounts, it must be said that the tone in this press release is quite upbeat.
It is still early days though. Lancaster is producing from one well and if the submersible pump fails – which tends to happen – it means a significant investment to get it back on track.
However, it must also be said that with the acceptance of the downgrade, the field has not performed badly. As we wrote before, it is likely that the well is also drawing oil from the overlying clastic wedge and is therefore not solely relying on fractured basement. This is probably helping Lancaster to keep on producing as it does.
HENK KOMBRINK
