Hurricane Energy plc, the UK based oil and gas company, has provided an update on its activities in the Greater Warwick Area (GWA).
As announced on 28 April 2022, the GWA Joint Venture has reassessed its understanding of the area, evaluating both the basement and the Mesozoic potential of the JV’s licences and has considered all options for further appraisal and routes to possible development.
Hurricane has determined that further appraisal and development costs to reach an economic development on the Warwick discovery within the remaining licence term is not feasible for the company. Further to discussions with the company’s JV partner, Spirit Energy, the GWA JV has decided to relinquish the P2294 licence area. This is in addition to the previously announced decision to relinquish the Lincoln P1368(S) licence sub area.
The carrying value of the P2294 asset in the Company’s accounts of approximately USD 4.1 million will be impaired. This impairment will be an accounting charge only and will not have any cash impact.
Antony Maris, CEO of Hurricane, comments, “We have made this decision deploying the rigorous screening criteria we bring to all opportunities in terms of determining the most appropriate allocation of our capital to deliver the best value for shareholders. There is no reasonable expectation that the P2294 licence could generate any near-term cash realisation, thus voluntarily relinquishing the licence at this time allows the Company to focus its time and financial resources on alternative and more attractive opportunities.”
“Following the recent May lifting we have updated our cash forecast such that if oil prices remain over $90/bbl we now forecast to have over USD 70 million of net free cash* post bond repayment. As such we are looking to utilise this cash to generate the best return for shareholders at an acceptable level of risk,” Maris adds.
*Unrestricted cash and cash equivalents, plus current financial trade and other receivables, current oil price derivatives, less current financial trade and other payables.