14th May 2014 11:03
LONDON (Alliance News) - Hurricane Energy PLC Tuesday said its pretax loss widened in 2013 when compared to the previous 16 months as finance costs and losses on fair value of its assets hit the company as it moves towards drilling new opportunities in the UK North Sea.
The newly listed UK oil and gas development and production company, which is yet to produce any revenues, said its pretax loss widened to GBP21.3 million from GBP6.8 million for the previous 16 month period.
The company said its operating expenses fell to GBP5.3 million for the period from GBP7.2 million, but it was hit by GBP5.7 million in finance costs and GBP8.8 million due to losses to the fair value of its derivative financial instruments.
Hurricane said its losses were primarily due to it entering new financing arrangements in April 2013, foreign exchange movements, and the write-off of exploration expenditure associated with its licence P1844.
The firm started 2013 with cash and cash equivalents of GBP22.4 million and spent GBP7.0 million during the period to further appraise its Lancaster Zone fractured basement reservoir, and in April this year the company said it has started mobilising the drill rig to test the oil discovery at the Lancaster site.
The company, which joined London's AIM market in February, is hoping to go into production of a significant material resource off the Shetland Islands in the coming years as a UK government pilot initiative has identified fractured basement reservoirs as a key opportunity in the UK energy development sector.
Fractured basement reservoirs are deep rock structures that have been naturally fractured by earthquakes and tectonic forces, and are as long as two and a half billion years old. The oil resides in the cracks that have formed between the rocks, rather than being contained in the rocks as with traditional sandstone reservoir oil plays.
Fractured basement reservoirs sites are closely associated with large oil plays such as the Bach Ho field offshore Vietnam, which has 1,450 million barrels of oil reserves, and the La Paz fractured basement in Venezuela, which has 678 million barrels of reserves.
Hurricane Energy shares were down 2.6% to 28.50 pence Wednesday midday.
By Tom McIvor; [email protected]; @TomMcIvor1
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