Europa acquiring offshore Ireland gas prospect for 'nominal fee'

UK, Ireland and Morocco-focussed exploration, development and production company Europa Oil & Gas announced the conditional acquisition of a 100% interest in Frontier Exploration Licence (FEL) 3/19, offshore Ireland, from DNO on Thursday.

The AIM-traded firm said that acquiring the licence, located close to the one trillion cubic feet-producing Corrib gas field in the Slyne basin, would add the 1.2 trillion cubic feet Edge prospect to its inventory in Ireland.

That included the nearby 1.5 trillion cubic feet Inishkea prospect, on its wholly-owned licence FEL 4/19.

The board said the acquisition, which remained subject to regulatory sign-off, would provide Europa with a “key strategic position” in the proven gas play of the Slyne basin, and was in line with the refocusing of its portfolio in Ireland towards gas.

It said FEL 3/19, which lies 18 kilometres east of the producing Corrib gas field, was formerly the LO 16/23 block, which DNO acquired following the acquisition of Faroe Petroleum.

Europa explained that it was acquiring a 100% interest in the licence from DNO for a “nominal upfront fee”, and the granting of a 5% net profits interest over future production of gas and liquids from any accumulation there to DNO.

Given its location near Corrib and associated gas processing infrastructure, the company said it was classifying FELs 3/19 and 4/19 as lower risk ‘infrastructure-led’ exploration.

All work commitments on FEL 3/19 had been fulfilled and, subject to regulatory approval, Europa’s forward plan would be to include the licence in a relaunch of the farmout of its strategic position in the Slyne basin.

“Subject to regulatory approval, our position in the Slyne Basin gas play will soon include the 1.2 trillion cubic feet Edge prospect on FEL 3/19, as well as our own 1.5 tcf Inishkea prospect on FEL 4/19,” said interim chief executive officer and executive chairman, Simon Oddie.

“We are confident that by adding FEL 3/19 to our portfolio we have not only increased the quantum of gross prospective gas resources to 2.7 trillion cibic feet, but have also increased the attractiveness of what was already a compelling investment proposition in the Slyne basin.

“With gas set to play a key role in Ireland’s energy mix and our licences located near Corrib and its processing infrastructure, our position benefits from having a highly attractive risk-reward profile.”

Oddie said with that in mind, the firm was “looking forward” to showcasing its new position to prospective partners, a number of which it had been talking to for a time.

“Both Edge and Inishkea are viewed as being drill ready and our aim will be to secure a partner or partners to fund drilling activity on one or both licences at the earliest opportunity.

“Together with ongoing work on the ground to bring the Wressle field in Lincolnshire into production in the second half of 2020 at an initial gross rate of 500 barrels of oil per day, which would more than double Europa’s existing UK onshore production to over 200 barrels of oil per day, we are well placed to advance our portfolio of licences up the development curve and in the process generate value for our shareholders.”

At 1237 BST, shares in Europa Oil & Gas Holdings were down 8% at 1.15p.