Hurricane Energy (LON:HUR), which is attempting to unlock the huge potential of a new North Sea oil play, said drilling on its Lancaster appraisal well was “proceeding according to plan”.
The brief update was made alongside annual results from the group, which listed on AIM in February.
Hurricane was set up to tap hydrocarbon bounty contained in fractured basement reservoirs in waters to the west of the Shetland Islands.
Fractured structures occurred when volcanic activity or some other tectonic force pushes the basement rock (often granite) through into the higher lying hydrocarbon bearing layer, forcing the basement up by as much as 1.5 kilometres.
The granite is hard but the faults and millions of fractures created in the rock then become host to significant oil accumulations, sealed in by layers of muds and shales.
Basement plays in Vietnam, Libya and Yemen have proven to be money-makers, with large volumes both in place and produced.
The breakthrough, in terms of attracting investment and farm-in partners, is to show a sceptical oil establishment that the theory works just as well in the waters around Britain.
Analysts and investors are excited about Lancaster as a previous well flowed 2,500 barrels a day – so the portents are good.
Work on current one-kilometre horizontal well, which began on April 26, is expected to take 75 days.
Once drilled, it will be tested to evaluate commercial flow rate potential and the results will be announced after third party analysis in the summer.
Assuming the drilling operation is successful and the reservoir behaves as expected then the Lancaster well will be suspended to join the existing 205/21a-4z well ready for tie-back to a host production facility. This will form part of the proposed Phase 1 development plan for the field.
Chief executive Robert Trice CEO said: "This well is not only pivotal for Hurricane but also important for the UK's oil industry as this is the first time a one kilometre horizontal well has been attempted in the UK's fractured basement.
“Consequently this operation represents an important step change in evaluating the UK's basement reservoir potential.”
The financial results, meanwhile, revealed the group posted a £21.4mln loss, which is usual for an oil exploration company at this formative stage of development.
It is well funded having raised £31mln in a pre-IPO round as well as a further £17mln on listing.