Europa Oil terminates royalty agreement for Whisby 4 well

Europa Oil & Gas, an exploration and production company with assets in the UK, West Africa and Ireland, announced the termination of its royalty agreement for the Whisby 4 well with BritNRG, the field operator and licence holder, on Wednesday.

The AIM-traded firm said the agreement had not been generating income for Europa, adding that further investment would have been required to potentially restore its profitability.

Citing technical risks and the prioritisation of capital allocation to other assets, the company said it had opted to end the arrangement.

The carrying value of the agreement had already been reduced to nil in Europa’s accounts, with the termination leaving no remaining liabilities.

Europa said the decision had resulted in a £0.19m net gain to its balance sheet.

The board said the company’s strategic focus remained on advancing its portfolio of assets across its core regions.

“The Whisby 4 well was drilled in 2003 and since then it has been producing on natural decline to the point where the original net profits interest agreement is no longer profitable for Europa,” said chief executive officer Will Holland.

“Given the uncertainties associated with any further investment in the Whisby 4 well, the board decided that our capital is better spent on other projects that offer our shareholders a better value proposition.”

At 0842 GMT, shares in Europa Oil & Gas Holdings were down 5.26% at 0.9p.

Reporting by Josh White for Sharecast.com.