Two main prospects ranging from about 650 million barrels to more than 1,500 million barrels have been identified in the blocks in a region west of the Shetland Islands, Sunshine company secretary Chris Blamey said yesterday.

As the operator, Hurricane will acquire the exploration and development acreage to explore, appraise and develop the blocks in water lees than 150 metres deep.

The experienced oil and gas explorer has an exploration technique focused on unconventional reservoirs in regions of favourable structural stress allowing identification of very large and previously over-looked prospects, Blamey said.

Because Sunshine is sharing Hurricane’s expertise, agreements have been made to cover the British company’s back-up costs to £225,000.

But the agreements depend on Sunshine shareholder approval and at least one block being offered, Blamey said.

All other costs will be shared equally, other than the cost of an appraisal well that will be paid for by Sunshine up to 130% of the cost of the first exploration well.

The bid’s drilling costs are estimated to be about A$15 million over three years.

To raise funds for the works program, Sunshine intends to use funds from exercise of the class A and C options which could raise about A$10.6 million, Blamey said.

More equity raising of not more than 15% of the issued capital might also be needed, depending on the final capital requirements of the blocks awarded from the bid.

A 15% equity raising, coupled with the proceeds from the exercise of options and conversion of convertible notes, would result in about 220 million shares, Blamey said.

A company general meeting is proposed for next month or August to consider the issues from the joint venture.