Cabot Energy confident amid Italian oil and gas review

Oil and gas company Cabot Energy confirmed that late on 12 February, the Italian government signed a decree which enacted the suspension of work on oil and gas exploration permits or applications for new exploration permits in the country while a review was undertaken.

The AIM-traded firm said the period given for the review was up to 18 months.

It said the suspension would be lifted as soon as consensus was reached on the terms under which the different areas would proceed with oil and gas exploration, adding that in the event no consensus was reached within 24 months, the suspension would be lifted.

During the suspension period, the ministries of economic development and the environment would review “all areas” in the Italian onshore and offshore territories, as part of its ‘Plan for Sustainable Energy Transition of Suitable Areas’ (PTESAI) Bill, to determine which were suitable for sustainable hydrocarbon prospecting, exploration and development activities.

Following the assessment of areas, a decision would be taken whether to allow further exploration activity or to reduce or withdraw licences in that area.

Should agreement not be reached between the government and the regions on all onshore licences within 24 months, the suspension would be lifted and rulings will only be issued for offshore areas, Cabot Energy said.

Its board confirmed that its exploration licences went through a “rigorous” environmental review, adding it was hopeful for a positive outcome.

However, it said the moratorium provided the opportunity for it to evaluate its future strategy in both its onshore Po Valley Cascina Alberto exploration permit with its partner, Shell Italia, and in its 100%-owned and operated offshore permits in the Southern Adriatic and Sicily Channel.

Cabot Energy held five permits and seven applications in process in total in Italy.

The legislation made allowance for compensation for companies that were impacted, with Cabot saying that should it become necessary, it could seek compensation for all exploration costs up to the withdrawal date.

“This new legislation is not a ban on exploration,” Cabot Energy chief executive officer Scott Aitken said.

“It allows the Italian government to reappraise the exploration licences it has granted.

“Cabot Energy will ensure the company is prepared to rapidly progress our licences as soon as the review is completed, whenever that occurs within the next 18 months.”

Aitken said the firm’s focus remained the funding of a scalable and repeatable development drilling programme in Canada.

“As announced in November, our Canadian assets have shown great promise with an annual increase of 26% in gross net proven plus probable reserves to 3.6 mmboe as well as a 339% increase in gross reserves and resources of the Canadian asset to 42.2 mmboe.

“We will continue to work with the authorities in Italy and remain hopeful of either securing a positive outcome for our exploration licences or receiving appropriate compensation at the end of the two-year assessment period.”