Progress on financing and further details on the development of the Lancaster fractured basement reservoir discovery could see Hurricane Energy (HUR:AIM) maintain its powerful momentum.

In the wake of the successful flow test on Lancaster (26 Jun) the shares are ahead 70.6% but, valued by the market at £316 million, they still trade at a significant discount to house broker Cenkos Securities’ core risked enterprise value of £832 million. We discussed Hurricane and fractured basement reservoirs in some depth in May (see Under the Bonnet, Shares, 1 May).

Essentially these largely untapped plays are located beneath the sandstones from which most of the UK’s oil has been produced to date. Yemen, Libya and Vietnam have successfully exploited fractured basement reservoir potential and Hurricane was hoping for a flow rate of 4,000 barrels of oil per day (bopd) to demonstrate the viability of applying the same methods in the North Sea. It achieved 9,800 bopd with the aid of well stimulation.

Hurricane owns 100% of the 200 million barrel Lancaster find and chief executive officer Robert Trice tells Shares that the company is considering bringing in a partner to meet the costs of a full field development. Last week’s announcement significantly de-risks the group’s total contingent resource of 450 million barrels - which is spread across Lancaster and the Whirlwind, Typhoon and Lincoln assets.