Soco has world class expertise in fractured basement reservoirs. It is enjoying strong cash flow from its very successful discoveries in Vietnam. It has mentioned the possibility of investing in new ventures in other areas.
Hurricane is a relatively new, relatively small company which describes itself as specialising in fractured basement reservoirs. It has a portfolio of acreage in the UK North Sea. These include the Lancaster field which last week delivered a stonking flow test which augurs well for commerciality and will probably translate to 200 million plus bbls of reserves. It has other discoveries awaiting appraisal and other prospects awaiting exploration drilling.
Hurricane's interest in all of its assets is 100% - no doubt a reflection of the scepticism with which many conventional thinkers have viewed the basic concept of basement oil. It has a stated intention to bring in a farm in partner and in its latest presentation (page 33) it says that the kind of farm-in partners it is seeking include:-
1) Major players West of Shetland
2) Global players with basement experience
3) Field Development specialists
Category 2 above would clearly include SOCO.
My thought is that Soco would make an ideal farm in partner - they have the expertise and the cash, they would not squeeze Hurricane out, as a larger partner might, there is a clear strategic fit. It could be good for both companies.
It's certainly a thought.
But even if the two companies do not hook up, investors who have done well out of Soco might want to look at Hurricane as a potential opportunity to repeat their success based using broadly the same formula that has worked so well in Vietnam.
