Spirit Energy to invest in discovery west of Shetland

Spirit Energy will invest in exploration and appraisal West of Shetland early next year after farming into 50% of Hurricane Energy's Greater Warwick Area

Spirit Energy, the E&P joint venture which combines Centrica plc’s E&P business with Bayerngas Norge AS, will invest in exploration and appraisal West of Shetland for the first time early next year after farming into 50% of Hurricane Energy’s Greater Warwick Area.

Spirit Energy will fund a $180 million (£139 million) campaign to drill three wells 100km West of Shetland, to further prove up the potential of an area which holds an estimated 2 billion barrels of oil equivalent (boe) in prospective and contingent resources.

The three wells will be drilled in licences operated by Hurricane Energy (“Hurricane”). They will target the Lincoln discovery and the Warwick exploration prospect, which are estimated to hold 604 million boe of 2C contingent resources and 935 million boe of prospective resources respectively.

The farm-in agreement builds on Spirit Energy’s strategy to create a sustainable exploration & production business in Europe. The transaction will be fully funded from Spirit Energy’s cashflow and gives the company access to one of the largest resource bases in Europe.

Should the well campaign and further tests in the area be successful, Spirit and Hurricane aim to progress Lincoln and Warwick towards full field development. At the development stage Spirit Energy would become licence operator, combining Hurricane’s expertise in the West of Shetland area with Spirit’s experience of operating assets on the UK Continental Shelf, including via floating production storage and offloading (FPSO) vessels which may be required for the development.

Chris Cox, Chief Executive of Spirit Energy, said: “Appraising the Lincoln discovery and exploring for new reserves in Warwick offers a tremendous opportunity for Spirit to participate in the early phases of resource maturation in one of the last known world-class oil development opportunities in the UK. We are looking forward to partnering with Hurricane Energy to progress these two West of Shetland licences.

“Since launching Spirit Energy less than a year ago we have set out to grow our reserves and resources and, following further exploration successes this year, farming into two exciting opportunities like Lincoln and Warwick helps cement our place as one of Europe’s leading independent oil and gas companies.”

As licence operator, Hurricane Energy has secured a rig to drill all three wells beginning in Q1 2019. A single horizontal appraisal well will be drilled in Lincoln, with two horizontal exploration wells to be drilled on the adjacent Warwick prospect.

As part of the farm-in agreement Spirit Energy will fund 100% of the initial drilling campaign. Assuming success in these first three wells, Spirit Energy and Hurricane will target a tie-in of one of the initial wells to the Aoka Mizu FPSO, and potentially a further three appraisal wells and full field development of the Greater Warwick Area. If these additional phases proceed, Spirit Energy will carry 50% of Hurricane’s costs of the tie in of the well to the FPSO and pay a bonus payment of between $150m-$250 million towards Hurricane’s costs of the full field development, contingent on a positive final investment decision.

The Greater Warwick Area, which neighbours Hurricane Energy’s Greater Lancaster Area, is made up of oil-bearing fractured basement reservoirs. Hurricane Energy previously drilled an exploration well in the Lincoln area in 2016, proving up resources in the area.


About Spirit Energy

  • Spirit Energy Limited is a leading independent oil and gas operator in Europe, Anchorwith expected 2018 production of around 50 mmboe (137 mboepd), and 2017 year-end 2P reserves of 363 mmboe and 2C resources of 168 mmboe.
  • Spirit Energy has operated and non-operated interests across the UK, Norway, the Netherlands and Denmark, with 28 producing fields and 70 exploration licenses.
  • Employing more than 800 people, Spirit is headquartered in the UK, with offices in Staines-upon-Thames and Aberdeen in the UK; Oslo and Stavanger in Norway; Hoofddorp in the Netherlands, and Copenhagen in Denmark. The business also owns and operates the Barrow Gas Terminals in the UK.
  • The company is owned by Centrica plc (69%) and Stadtwerke München Group (31%).
  • For more information, visit http://www.spirit-energy.com/

About Hurricane Energy

  • Hurricane Energy was established to discover, appraise and develop hydrocarbon resources associated with naturally fractured basement reservoirs. The Company’s acreage is concentrated on the Rona Ridge, in the West of Shetland region of the UK continental shelf.
  • The Lancaster field (100%) is Hurricane’s most appraised asset, with 2P Reserves and 2C Contingent Resources of 523 million stock tank barrels of oil.
  • Other assets include Lincoln (50%), Warwick (50%), Halifax (100%), Whirlwind (100%), and Strathmore (100%). Together with Lancaster, these assets have total combined 2P Reserves and 2C Contingent Resources of 2.6 billion barrels of oil equivalent.
  • For more information, visit http://www.hurricaneenergy.com/

About the Greater Warwick Area

  • The Greater Warwick Area is 100km West of Shetland and 100km north of Orkney, and is made up of the Lincoln (P1368 S) and Warwick (P2294) licenses
  • The Lincoln discovery holds contingent resources of 604 million barrels of oil equivalent, while the Warwick exploration prospect has prospective resources of 935 million barrels of oil equivalent
  • Subject to completion the Greater Warwick Area licenses would be 50%-owned by Hurricane Energy (operator), with the remaining 50% owned by Spirit Energy
  • The region neighbours Hurricane Energy’s Greater Lancaster Area, where Hurricane Energy intends to produce via an early production system beginning in 2019
  • Like the Greater Lancaster Area, the Greater Warwick Area contains oil in fractured basement reservoirs along the Rona Ridge in water depths of approximately 150m