Hurricane Energy plc is looking to raise $520million to fund first oil from its landmark Lancaster development, West of Shetland.
The UK based oil and gas company propose raising $300million through the placing of ordinary new shares at a price of 32 pence per share.
The remaining $220million would be raised through a convertible bond offering, subject to an additional US$10 million over-allotment option.
Hurricane claim this structure will allow the company to retain control over the timing of receipt of funds.
This will allow the firm to meet the schedule for a final investment decision on the initial phase of development of Lancaster – an Early Production System (“EPS”) – in summer 2017.
The Greater Lancaster discovery has been touted by some experts as one of the biggest potential North Sea finds in a decade.
The EPS is expected to produce 17,000 barrels of oil per day and provide data required to plan a full field development of Lancaster.
Hurricane is targeting first oil in H1 of 2019.
The net proceeds of the placing and the convertible bond offering will primarily be used by the company to fund capital expenditure in relation to the EPS development at the West of Shetland field.
Dr Robert Trice, chief executive, said: “This fundraising facilitates the key to unlocking value on the company’s wider portfolio: production and reservoir data that can only be acquired through long term production operations.
“Furthermore, the EPS is anticipated to generate returns at foreseeable oil prices.
“The four back-to-back drilling successes in 2016-17 created the resource platform which has enabled the Company to move forward confidently with the EPS.
“Building on the drilling success and EPS progression, Hurricane sees several catalysts for value creation in the near term, including FID on Lancaster, a revised CPR on Halifax, Lincoln and Warwick, progress with the EPS delivery and the potential for a successful conclusion to the ongoing farm out discussions. We look forward to updating the market in due course.”
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