Hurricane Energy said today that the $70million it has conditionally raised through a share placing would be used to develop its flagship Lancaster discovery in the North Sea.
Hurricane shares were down 7.8% at one point yesterday, but the announcement rallied them to finish the session up 1.29% at 39.25p.
The London-listed company said the fundraising drive would help firm up the timeline for the early production system (EPS) on Lancaster.
The cash will be put towards the cost of engineering studies, subsea equipment and the drilling of exploration wells on two nearby prospects.
Hurricane, set up in 2005, said Kerogen Investor and Crystal Amber had signed up for 93million shares at a cost of £31.6million.
The placing is subject to shareholder approval, with the firm’s general meeting to be held on November 7.
Lancaster, which is thought to be one of the North Sea’s largest undeveloped fields, forms part of Hurricane’s portfolio of west of Shetland “fractured basement” exploration projects.
Hurricane expects to make a final investment decision on the EPS in the first half of 2017, with first oil targeted for 2019.
Hurricane chief executive Robert Trice said: “The transaction also allows us to continue to strengthen the quality of our investor base. We are grateful for the support from our existing shareholders, particularly Kerogen Investor and Crystal Amber, and also extremely pleased to welcome a number of new blue-chip institutional shareholders to our register following the strong interest received in the Placing.
“We believe that this reflects both the potential of Hurricane’s resource base and our ability to deliver against our strategy, as well as the growing confidence in the fractured basement opportunity in the UK.
“With a number of catalysts including the results from the two new wells, securing an FPSO (floating production, storage and offloading vessel) for the EPS, further results from the Lancaster 7 well drilling, a new competent person’s report in the first half of 2017, and sanction of the EPS, the next 12 months are expected to be an exciting period for the company.”
Hurricane is also considering making an open offer to all qualifying shareholders to generate an extra £4.4million.
The firm said it would provide further details of the open offer “in due course”.