Hurricane Energy has predicted that the end of its flagship Lancaster field’s production life will arrive at around the end of 2023.
Publishing its financial results for 2021, the firm described a year of “profound change” with commodity prices surging and thus broadly turning around the company’s fortunes.
But following major downgrades to Lancaster and a recent charter extension to the Aoka Mizu production vessel, the firm has put a timeline in place for its end.
Hurricane Energy said it expects Lancaster’s “remaining economic life” to be “to be at least 18 months from June 2022”.
It comes as the firm recently submitted decommissioning plans for the FPSO, three years after first oil was achieved.
A recent competent person’s report added some 2.4m barrels to the field, but it is a far-cry from the fractured basement development’s former prospects, once thought to hold contingent resources as high as one billion barrels.
However, Hurricane said it is now “focused on building” its position and “increasing strength and value”.
Pre-tax profits totalled $18.2m, reversing huge losses of $571m in 2020, on revenues of $240.5m, up from $180m the prior year.
The firm expects to fully repay its $230m convertible bond – once a point of huge contention when oil prices were low – in July this year and, assuming an oil price of at least $90 a barrel, expects to have net free cash of at least $60m.
The West of Shetland operator reported daily production of 10,267 bopd in 2021, down from 13,900 bopd in 2020.
Alongside partner Spirit Energy, Hurricane has also decided to relinquish control of the licence for the Lincoln field due to the cost of appraisal and development not being feasible.
Hurricane therefore took a $54.3m impairment against the carrying value of Lincoln in its accounts.
Reflecting on the year, CEO Antony Maris said: “This last year has been one of profound change for Hurricane. Despite all the recent volatility in the oil price, with the expectation that oil prices remain over $90/bbl, post bond repayment we forecast to have over $60 million of net free cash.
“The UK Government’s renewed emphasis on security of supply is welcome and we are working hard to identify how best to optimise capital allocation in future activities to build further value for our shareholders. We have opportunities both within our existing portfolio, and in new opportunities in the UK oil and gas sector.
“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. Our thoughts are therefore fully focused on building on our position of increasing strength and value.”