Hurricane Energy Plc plans to raise $520 million for test drilling at its Lancaster oil field in the North Sea, a major milestone for the project that could breathe new life into the aging offshore basin.

The plans include placing new shares expected to raise a minimum of $300 million at 32 pence per share, as well as a $220 million convertible bond offering, Hurricane said June 29.

Hurricane, listed on London's Alternative Investment Market (AIM), has seen its shares rise sharply since 2016 after it revised upwards resource estimates for its flagship field in the West Shetlands region, which it thinks could be Britain's largest undeveloped oil find.

Hurricane shares were up 8% at the close of trading.

The funds will go towards financing an early production system (EPS) to test the Lancaster Field ahead of a full field development decision. The EPS is expected to produce 17,000 barrels of oil per day (bbl/d), Hurricane said. Production from Lancaster is expected to start in the first half of 2019.

In April, Hurricane upgraded its recoverable resource estimate for the Lancaster Field to 593 million bbl from 200 million bbl in a 2013 assessment.

Hurricane specializes in recovering oil from hard and brittle rock such as granite that was fractured through earthquakes, allowing oil to accumulate in what is known as fractured basement reservoirs.

The Lancaster field development could be one of few major new projects in the U.K. North Sea which have seen production steadily decline since the late 1990s despite a revival in recent years.

Hurricane's largest shareholder, private equity fund Kerogen Capital, has indicated it intends to subscribe in the placing in an amount of $35 million, Hurricane said.

Cenkos Securities is acting as adviser and joint book-runner to the company for the placing, along with Stifel Nicolaus.

The company will hold a general meeting on July 21 to vote on the proposed placing and bond offering.