Quite a day for Hurricane Energy shareholders as shares rise over 50%

I did a write up on North sea oil explorer Hurricane Energy just over a week ago and the high expectations from this company were delivered in full today with a hugely positive RNS regarding their Lancaster well. The Lancaster Field, which is 100 per cent. owned by Hurricane, has estimated 2C Contingent Resources of 207 million barrels of oil equivalent (MMboe). See the previous article at: http://www.financial-spread-betting.com/community/aim/key-news-for-hurricane-energy-due-from-lancaster-horizontal-well.html

The shares have gushed up to 55% higher this morning and are currently up 52% at 45p, having closed at 29p last night. Quite a spike and in line with the 43p IPO price earlier in 2014 and way above the 21p the shares hit shortly after the IPO. The shares were trading barely 10% higher for some time early this morning which would have proved an excellent entry point for those fast enough to pull the trigger. The current market cap is £271 million.

The company is focused on “fractured basement reservoirs” in granite formations in blocks 60 miles West of Shetland. Today the company announces that it had successfully completed the testing phase of its horizontal appraisal well in the Lancaster fractured basement oil discovery West of Shetland. Expectations were for a flow rate around 4000 barrels per day with a maximum of around 6000-8000 barrels per day and the company delivered a result which exceeded even this upper end prediction.

Production tests achieved a sustainable oil flow rate using an Electrical Submersible Pump (ESP) of 9,800 stock tank barrels of oil per day (STB/d), the established oil flow rate being constrained by the capacity of the surface test equipment. Natural flow, maximum sustainable flow rate of 5,300 STB/d of 38o API oil.

Dr Robert Trice, CEO of Hurricane, commented from the Sedco 712 drilling rig: “I am delighted to report the successful completion of our testing operations which have achieved hydrocarbon flow rates in the upper range of our pre-drill estimates.  The maximum sustainable flow rate of 9,800 STB/d is particularly impressive as it was achieved despite being constrained by surface equipment. Whilst the artificial lift rates are important, the fact that the well also flowed oil at 5,300 STB/d unaided (natural flow) is a clear demonstration that Hurricane’s plans for progressing to a Lancaster field development are technically viable.

I consider this year’s operational result to be major step in further de-risking the Company’s 2C Contingent (444-470MMboe) and P50 Prospective (432-442MMboe) resources and very important as we seek to enhance shareholder value. This successful outcome reinforces the potential importance of basement resources as a strategic resource for the UK.”

It just shows with the right news, AIM stocks can leap up! Those buying into the Hurricane story in the last few weeks or even first thing this morning will be feeling very pleased with themselves. I personally have taken profits at these levels due to the “AIM casino” but good luck to holders.

Contrarian Investor UK

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