Hurricane Energy (HUR)

[PeterGray]

Looks like you need an account - which "your company's portal coordinator" has to set you up for.

[Carcosa]

Looks like you need an account - which "your company's portal coordinator" has to set you up for.

I think I got the point across and just provided the links so any readers can independently check that what I wrote was accurate within the limitations of the data provider.

The implication is that oil flowed but whether or not that is meaningful for Hurricane can only be determined once the RNS is out. As it was abandoned a couple of days ago then hopefully the RNS will be out tomorrow or Monday.

Carcosa
(probably over analysing)

[Carcosa]

Looks like you need an account - which "your company's portal coordinator" has to set you up for.

try this. Might work: https://itportal.decc.gov.uk/edufox5liv ... RCH_PUBLIC

[dspp]

I don't think one can assume oil flowed. It could be a completely irrelevant overpressured water aquifer that gave a minor kick at a completely different depth, and which is now safely behind casing. Or it could have been hydrocarbons. Or something else that they mis-read. See https://itportal.decc.gov.uk/web_files/ ... _005_7.pdf section 2.2.19.

The interesting and unambiguous information is TVDSS 1800m was a depth they thought it worth drilling to. That could have two implications without thinking too hard.

Noting the share price action on the back of this I think they will find it difficult not to release an RNS soon.

regards, dspp

[PeterGray]

try this. Might work

Thanks, that works

[dspp]

Rig now released and away. FT running a story that the Halifax drill contacted 1km oil. Behind paywall. Apparently being retweeted by one of the funds holding HUR ! LSE chatter that weather timed out DST attempt. Isn't there some sort of a 'disorderly market' test ? Difficult to see how RNS can be delayed much longer.

regards, dspp

[Carcosa]

https://www.ft.com/content/7448d5be-108 ... ba212dce4d

Hurricane is expected to announce that initial data from its Halifax well indicates the presence of a 1km-deep oil column and that, crucially, it appears to be part of “a single large hydrocarbon accumulation” connected to the company’s adjacent Lancaster field.

Ridiculous forum chatter over RNS release dates in recent days by apparently headless chickens. However following the Hurricane /FT report there will certainly be an RNS Monday.

[PeterGray]

Difficult to see how RNS can be delayed much longer.

There must be an RNS tomorrow after this - even if it's only to say the FT is talking balls - which I suspect is unlikely!

Peter

[HaiderAli]

Difficult to see how RNS can be delayed much longer.

There must be an RNS tomorrow after this - even if it's only to say the FT is talking balls - which I suspect is unlikely!

Peter

This was standard Encore procedure IIRC (weekend news releases to the press), and together with the CA tweet on Friday, I think an RNS is guaranteed. Nothing fishy on this front.

[dspp]

http://www.lse.co.uk/share-regulatory-n ... Operations

For immediate release: 27 March 2017

This announcement contains inside information.

Hurricane Energy plc

("Hurricane" or the "Company")

Completion of Halifax Well Operations and Release of the Transocean Spitsbergen Rig

Well Results Indicate that Lancaster and Halifax are a Single Hydrocarbon Accumulation

Hurricane Energy plc, the UK based oil and gas company focused on hydrocarbon resources in naturally fractured basement reservoirs, announces that operations on the 205/23-3A well (the "Halifax Well") are complete.

The Company can confirm that the well is an oil discovery with initial data analysis indicating Halifax is linked to the Lancaster field forming a single large hydrocarbon accumulation.

The information below relating to the Halifax Well is preliminary and will be updated following detailed analysis once the final well data and third party reports have been received and analysed.

The principal purpose of the Halifax Well was to support the Company's view that the Lancaster Field and the Halifax prospect are one large connected structure. Well results support the Company's opinion. The Halifax Well has successfully identified an extensive oil column, significantly below local structural closure. The reservoir interval encountered is pervasively fractured with porosities similar to those at Lancaster. The Company believes that the deeper oil down to ("ODT") at 1,846m true vertical depth subsea ("TVDSS") identified in the Halifax Well, compared with an oil water contact ("OWC") at Lancaster at 1,678m TVDSS, is most likely caused by a tilted OWC.

The Halifax Well was drilled and cased to 1,179m TVDSS in accordance with the Company's drilling programme which was designed to isolate a potential gas cap and oil bearing column to a depth of 100m true vertical thickness ("TVT") below structural closure. It was subsequently drilled to 1,801m TVDSS and a Drill Stem Test ("DST") was undertaken. However, constrained by budget, available time and the safety requirement of drilling overbalance, the well was unable to clean up and recovered only traces of formation oil to surface. The well was finally TD'ed at 2,004m TVDSS, with no confirmed OWC encountered.

Following discussions with the Oil & Gas Authority, the Halifax Well has been suspended to allow for potential future operations to either deepen and/or undertake further testing of the well, the programme for which will be determined following analysis of the well results.

Preliminary third party analysis from the Halifax Well indicates:

· a very significant hydrocarbon column of at least 1,156 metres is present within the basement extending well below local structural closure (which is at 1,040 metres TVDSS);

· that the basement reservoir below the final casing point (1,179m TVDSS) is pervasively fractured (based on initial analysis of borehole image logs processing); and

· that porosity is consistent with that at Lancaster (based on initial petrophysical analysis.

The Spitsbergen rig has demobilised and is no longer on hire to Hurricane.

Dr Robert Trice, Hurricane's CEO, commented:

"This is a highly significant moment for Hurricane and I am delighted that the Halifax Well results support the Company's view that its substantial Lancaster discovery has been extended to include the Halifax licence. We believe that the GLA is a single hydrocarbon accumulation, making it the largest undeveloped discovery on the UK Continental Shelf.

The discovery of a 1km hydrocarbon column at Halifax validates the efforts the Company undertook to acquire the licence and drill, test and log the Halifax Well through the winter months. Given the positive well results, the Halifax Well has been suspended to provide the Company the option to return to undertake further testing as well as provide the option to deepen the well and thereby establish a definitive oil water contact.

The end of the Halifax Well marks the completion of the 265 days during which Hurricane has had the Transocean Spitsbergen rig on hire. The Company has successfully drilled one development (Lancaster Sidetrack), one appraisal (Lancaster Pilot), one intervention on the 2014 horizontal well (in preparation for well completions in Q2 2018) and two exploration (Lincoln and Halifax) wells. We have now completed the well stock for our Early Production System ("EPS") and in the process materially increased and de-risked the resource volumes associated with Lancaster. The exploration wells on Lincoln and Halifax have resulted in the discovery of extensive oil columns and we therefore expect that later iterations of our CPR will significantly upgrade our resource base on both the Greater Lancaster and Greater Warwick Areas.

I would personally like to thank Transocean whose pragmatic approach to commercial and contractual negotiations have been a breath of fresh air in today's tough industry environment, and have facilitated Hurricane's successful campaign during a time when UK exploration and appraisal drilling has been at a low. We have created a great partnership and I look forward to successfully continuing this relationship.

The Lancaster CPR is due imminently and FID for the Lancaster EPS remains on track for the end of H1 2017. We will process the data from the Lincoln and Halifax wells and expect to release updated CPRs towards the end of 2017.

These are exciting times for Hurricane."

[dspp]

Tilted OWC are not something I have encountered before under static (as-discovered) conditions, as opposed to dynamic in-production conditions. To my simple mind this indicates a series of semi-sealing baffles along the length of the field. However it could be crisper better seals and distinct steps. Can any G&G and/or ResEng on this board comment or direct me to more open-source reading. I have had a quick google of course. Indicates need for at least two EPS (one per LinWar and HalLan) and quite a few appraisal wells to properly delineate. Not cheap.

Another by-the-way is to ask what is known about oil source of Clair vs Hur fields ? Anyone care to comment. I have seen comments to effect that Shell has picked up some adjacent acreage recently - what is known about what they are targetting ?

regards, dspp

[PeterGray]

Tilted OWC are not something I have encountered before under static (as-discovered) conditions, as opposed to dynamic in-production conditions. To my simple mind this indicates a series of semi-sealing baffles along the length of the field

Here's one explanation:

https://www.researchgate.net/profile/Da ... 6b03c7.pdf

I'm not clear how they can be sure it's a single uninterrupted field from Lancaster to Halifax, the possibility that there are at least partial faults or other limits to oil in that distance that contribute to differences in OWC must also exist?

Peter

[dspp]

Peter,

Thank you. That's interesting. That paper is describing something that is dynamic in the aquifer context, but not in the oil context. What you described, and I too wonder about, is structural and/or rock property related. I guess in time the drillbit will find the truth.

One possibility they are confident (rightly or wrongly) that this is one accumulation is analysis of oil (from cuttings) compared with the other wells. Another might be the pressure profile. Again more facts will come out in time.

regards, dspp

[dspp]

Pondering further a hydrodynamically-induced tilted OWC, if it is the correct explanation, implies:

+ increased volumetrics as deeper and more laterally extensive northern field volume in Halifax area
+ higher probability of good aquifer drive
- possibility of reduced recovery factor due to lesser ability to optimal manage voidage and bypassing

Interesting. They will need to explain a north-flowing aquifer if this is correct.

regards, dspp

[PeterGray]

Interesting. They will need to explain a north-flowing aquifer if this is correct.

I'm hoping someone can explain how it works! Given there must be a finite amount of water in any aquifer,and renewal at the depths we are talking about out under the sea must be slow or non existent, just how long can it flow for?

Unless there's some sort of circulating effect due to the earth's rotation?

Fascinating but puzzling. I may have to read some more!

[dspp]

It is explained in the pdf you linked to. Basically it is flowing very slowly across a very broad front and this lowers the pressure. At the OWC the pressures must balance so the OWC is lower at one end than the other. There is an input at one end (most often meteoric waters per paper) and an outlet at other end (most often to surface). If the distances are great enough this can tilt the OWC enough to be material. Given the 30km in play in Halifax extent up Rona Ridge that is enough. It has been material on other fields worldwide.

A good find was that paper you found Learn something new every day. Mind you there could be multiple things going on here ........ and this might not be involved at all ! More study (wells, EPS) required.

regards, dspp

[Nimrod103]

Are you not worried that they are claiming Halifax as an oil discovery, yet failed to flow more than traces of oil from a DST? I don't find their explanation for failure all that convincing.

[dspp]

Are you not worried that they are claiming Halifax as an oil discovery, yet failed to flow more than traces of oil from a DST? I don't find their explanation for failure all that convincing.

Am I worried : yes. That is a technical (operational) worry. The non-explanation given was also a worry. Mostly alleviated by having been around enough well programmes to form my own view as to what a prudent operator would have done over the last few months in the conditions and circumstances they were facing. And greatly alleviated by my having watched the way in which the technical part of this management team has conducted itself so far over several years (and knowing their backgrounds) and which therefore allows me to form the view in the previous sentence. Basically at this point I have cut them a bit of slack and I recognise that. Whether it is justified remains to be seen esp as I am not reading the daily drilling reports.

I am also worried, and to an extent encouraged, by the share price response. That may be both a function of the CA / Ker option overhang and internal rebalancing requirements (which the cynics regard, perhaps rightly, as a 'mates rates' opportunity) but nonetheless I topped up today. Yes a higher price, but a lower risk. IMHO. (by the way my intention was not to top up but when I saw the price response I could not believe it - so I did).

The point about the tilted OWC is quite interesting and potentially material in volumetrics terms. It is 168m. Over a 1156m column x a 30-km out-step, this makes for significant volumetric upside esp given the splayed shape of Rona Ridge. Plus the aquifer point I made earlier. Minus the RF point I made earlier.

I am satisfied with the anecdotal info given re poro-perm at this stage, i.e. similar to Lancaster.

No change in oil composition reported: a good indication thus far. Hence my unanswered Q about a) what acreage Shell are booking and b) where Clair came from.

But what do I know. All I did was run O&G fields for a living .... after the clever people had done their bit ... or not .......

What's your view ?

regards, dspp

[dspp]

By the way I am asking about the adjacent acreage not because I think there is more basement out there in the immediate surrounds, but because spilt oil might have ended up in other traps of other kinds. Thought that was an obvious point to make but having just read some driller talk on LSE maybe it needs saying. But most spilt oil is never caught of course ......
regards, dspp

[Nimrod103]

Are you not worried that they are claiming Halifax as an oil discovery, yet failed to flow more than traces of oil from a DST? I don't find their explanation for failure all that convincing.

Am I worried : yes. That is a technical (operational) worry. The non-explanation given was also a worry. Mostly alleviated by having been around enough well programmes to form my own view as to what a prudent operator would have done over the last few months in the conditions and circumstances they were facing. And greatly alleviated by my having watched the way in which the technical part of this management team has conducted itself so far over several years (and knowing their backgrounds) and which therefore allows me to form the view in the previous sentence. Basically at this point I have cut them a bit of slack and I recognise that. Whether it is justified remains to be seen esp as I am not reading the daily drilling reports.

I am also worried, and to an extent encouraged, by the share price response. That may be both a function of the CA / Ker option overhang and internal rebalancing requirements (which the cynics regard, perhaps rightly, as a 'mates rates' opportunity) but nonetheless I topped up today. Yes a higher price, but a lower risk. IMHO. (by the way my intention was not to top up but when I saw the price response I could not believe it - so I did).

The point about the tilted OWC is quite interesting and potentially material in volumetrics terms. It is 168m. Over a 1156m column x a 30-km out-step, this makes for significant volumetric upside esp given the splayed shape of Rona Ridge. Plus the aquifer point I made earlier. Minus the RF point I made earlier.

I am satisfied with the anecdotal info given re poro-perm at this stage, i.e. similar to Lancaster.

No change in oil composition reported: a good indication thus far. Hence my unanswered Q about a) what acreage Shell are booking and b) where Clair came from.

But what do I know. All I did was run O&G fields for a living .... after the clever people had done their bit ... or not .......

What's your view ?

regards, dspp

How do they identify the OWC in the absence of (1) DSTs or (2) MDT pressure data (I assume they don't have any of this, they have never referred to it, and it is of somewhat dubious value in fractured reservoirs anyway). Wireline log analysis is open to a lot of 'interpretation' to come up with the answer you want. I assume they are going on oil shows in drill cuttings. Lot of unknowns here, or at least open to different alternative interpretations.
Saying all that, I suspect there is a lot of oil there, my issue has always been with how much they can get out commercially.