Agreement for Use of FPSO at Lancaster Field
Tuesday 29 November 2016
Hurricane Energy, the UK-based oil and gas company focused on hydrocarbon resources in naturally fractured basement reservoirs, is pleased to announce that it has signed Heads of Terms with Bluewater Energy Services ("BES") for the use of the Aoka Mizu Floating Production Storage and Offloading Vessel ("FPSO") on the Company's Lancaster field, West of Shetland.
Hurricane intends to use the Aoka Mizu for the Early Production System ("EPS") phase of development and will have the right to extend the contract for up to ten years. Under the Heads of Terms, BES has granted Hurricane an exclusive right to enter into fully-termed agreements until November 2017. It is the parties' intention to enter into fully-termed agreements prior to Hurricane's expected sanction date in mid-2017.
The Heads of Terms sets the scope of work required to ensure the Aoka Mizu meets Hurricane's requirements for deployment at Lancaster. In addition, the Heads of Terms sets out the commercial terms between BES and Hurricane, both for the cost and terms of the upgrade and life extension work and the subsequent charter rates during the expected life of the contract.
Following the signing of the Heads of Terms, Hurricane and BES have commenced a second phase FEED study which is expected to complete in early 2Q 2017.
Dr Robert Trice, Chief Executive of Hurricane, commented:
"Hurricane is delighted to have entered into an FPSO agreement for the Lancaster EPS. This will allow us to maintain our desired first oil date of H1 2019 and further demonstrate the potential of fractured basement reservoirs in the UK.
We are grateful to BES both for the strong commitment they have shown to the Lancaster project and for their innovative approach to working with Hurricane. We have a strong strategic and commercial alignment and this collaborative approach is already reflected throughout all aspects of the ongoing technical work on the project.
As our current drilling campaign continues to assess the full regional potential of our acreage, this Agreement is another important milestone in our efforts to move Lancaster towards production, creating value for our shareholders and for the UK."