Hurricane Energy has signed an agreement to sell 50% stake in its Lincoln (P.1368 South) and Warwick (P.2294) licenses, together covering the Greater Warwick Area (GWA) in the North Sea, to Spirit Energy for $387m.
Image: An offshore gas drilling platform. Photo: courtesy of QR9iudjz0/Freeimages.com.
The agreement enables Hurricane to commit to a firm work program on the GWA through to the end of 2019. The work program is comprised of up to five phases.
Under the 2019 drilling campaign, three horizontal wells are planned to be drilled on the GWA with each well planned to be suspended as a future producer.
The program is expected to cost $180.6m and is planned to be 100% funded by Spirit Energy.
Upon drilling, one of the three wells is planned to be tied back to the Aoka Mizu to facilitate early production.
There are also plans to offer data to plan the first phase of a complete field development of the GWA.
As part of the deal, Spirit Energy will also fund certain engineering work and long lead items for future phases, in exchange for a 50% stake in the licenses covering the GWA.
Additionally, Spirit Energy plans to pay 75%, up to a maximum of $140.7m, of the expected gross cost of the tie back and the needed modifications to the vessel in order to enable production from the GWA additional well to the vessel.
Hurricane Energy CEO Dr Robert Trice: “This transaction allows us to accelerate monetisation of our GWA resource base through a work programme designed to target significant reserve growth. The initial phases include three wells, one of which is anticipated to be tied-back to the Aoka Mizu in 2020.
“At this point, Hurricane will have two significant accumulations developed to Early Production System stage, providing long-term production data – critical to the realisation of value from fractured basement fields, as well as generating significant cash flows.
“We are already planning for three further GWA wells and commencement of full field development FEED during 2020, allowing us to aim for development sanction in 2021.”
The two companies are also planning to drilling three additional wells to further assess the accumulation as well as undertake front-end engineering and design (FEED) before approving the first phase of a standalone GWA full field development in 2021.