Hurricane Energy plc, the UK based oil and gas company, provides an update on Lancaster field operations and net free cash balances as of 31 August 2021.
Lancaster Field Operations Update
The following table details production volumes, water cut and minimum flowing bottom hole pressure for the 205/21a-6 ("P6") well during August 2021.
August 2021 Lancaster Field Data
Oil produced during the month (Mbbls) P6 : 355
Average oil rate (bopd) P6 : 11,467
Water produced during the month (Mbbls) P6 : 144
Average water cut(2) P6 : 29%
Well gauge pressure (psia)(3) P6 : 1,637
As previously noted, the production rate immediately following the completion of the annual shutdown was elevated leading to the average oil rate for August being higher than in previous months. This increased production rate was accompanied initially by a greater rate of decline, such that the current oil production is now similar to the rate seen just prior to the shutdown.
As of 15 September 2021, Lancaster was producing c.10,800 bopd from the P6 well alone with an associated water cut of c.33%.
As previously announced, the 24th cargo of Lancaster oil, totalling approximately 505 Mbbls, was lifted in late-August 2021. Over 10 million barrels of Lancaster crude have now been produced and sold from the Lancaster field. The next cargo is expected to be lifted in early- to mid-October 2021.
As of 31 August 2021, the Company had net free cash(4) of $144 million, compared to the last reported figure of $122 million as of 31 July 2021.
On 15 September 2021, Hurricane completed the repurchase of approximately 34% of its outstanding $230 million 7.5% Convertible Bonds due in July 2022 at a cost of $62 million (including accrued interest), reducing the par value of Convertible Bonds held by third parties to $152 million. The repurchased bonds were cancelled on 16 September 2021.
The Company believes that net free cash provides a useful measure of liquidity after settling all its immediate creditors and accruals and recovering amounts due and accrued from joint operation activities, outstanding amounts from crude oil sales and after settling any other financial trade payables or receivables. It should be noted that the net free cash is calculated as at the balance sheet date and does not take into account future liabilities that the Company is already committed to. As such, not all of the net free cash would be available for repayment of the Convertible Bonds at their maturity in July 2022.
2021 Interim Results and appointment of external auditor
At the Company's most recent Annual General Meeting, held on 30 June 2021, the Resolution to re-appoint Deloitte LLP as the Company's auditors was not passed. Following the outcome of a tender process, the Company is pleased to confirm the appointment of PKF Littlejohn LLP ("PKF") as its new external auditor. PKF are now commencing their review of the Company's interim financial statements for the six months ended 30 June 2021.
As such, the Company anticipates releasing its 2021 interim report and half-year results on 14 October 2021, taking advantage of the one-month extension allowable by AIM to release interim financial statements within four months of the interim balance sheet date rather than three months.