January 22, 2014 4:27 pm

N Sea oil explorer Hurricane Energy set for £272m float on Aim

An oil rig in the North Sea off the coast of Scotland©Getty

An oil rig in the North Sea off the Scottish coast

North Sea oil explorer Hurricane Energy will float on Aim next month after raising further funds for test drilling in waters to the west of the Shetland Islands.

The company, which has already attracted investment by oil major BP and a number of blue-chip investors including F&C Asset Management, BlackRock, Artemis and JPMorgan, plans to raise £18m at 43p a share in an initial public offering that values the company at £272m. It is being advised by Cenkos Securities.

The flotation will also see warrants issued in a £31m fundraising last March converted into shares at its debut on Aim. Leading shareholder James Hudleston will see his stake of just under 20 per cent diluted to 15 per cent once trading begins on February 4.

The company was founded in 2005 with private backing by chief executive Robert Trice, a former executive at Enterprise Oil. The North Sea explorer has already funded two drilling projects through previous fundraisings totalling about £150m. Hurricane fully owns the Lancaster discovery, in a licence that was abandoned by Royal Dutch Shell in the 1970s.

However, Hurricane argues that improved techniques for the exploitation of fractured basement reservoirs in granite formations, which lie below sandstones that have previously dominated North Sea exploration interest, could provide a further wave of opportunities for commercial discoveries.

Such formations had already yielded major discoveries in Vietnam and Yemen, said Mr Trice, and could add to the potential for extending the UK’s remaining oil resources.

After a discovery of light oil at its Lancaster prospect in 2009, Hurricane made another oil and gas discovery at its Whirlwind fractured basement reservoir in 2011. The company has two further fractured basement prospects, Typhoon and Lincoln, in its portfolio.

The company, which puts its best estimate of recoverable contingent resources across its west of Shetlands portfolio at 450m barrels of oil equivalent, plans to spend £40m on further appraisal work at Lancaster this year.

Mr Trice said he hoped that this would attract a larger partner to help finance development plans that envisages using subsea wells tied to a floating production, storage and offloading (FPSO) vessel.

However, despite Hurricane’s success in moving towards flotation, Mr Trice did not predict any significant upturn in the levels of new issues by other oil explorers on London’s junior market this year.

“It’s not a renaissance – we have a unique story that sets us apart. But the sector is very tough,” he said.

Statistics issued by Aim this month stated that just £111m was raised in seven new issues by oil explorers and producers last year.

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