Europa shares plunge as oil major quits farm-out talks

UK and Ireland-focussed exploration, development and production company Europa Oil & Gas updated the market on the farm-out process for its wholly-owned Frontier Exploration Licences (FEL) 4/19, 1/17 and 3/13, offshore Ireland on Thursday.

The AIM-traded firm had announced on 29 October that it had been in farm-out discussions with a number of parties in relation to the licences, including negotiations with the north west Europe division of an unnamed major oil company, which had been ongoing for more than 12 months.

On Thursday, Europa said the major had now informed it that, as part of a wider strategic review, the licences are no longer under consideration for farm-in.

It said discussions with several other parties regarding the farm-out of the licences were continuing.

The company said it was prioritising securing a partner to drill its flagship prospect in Ireland - the Inishkea prospect, which lies on FEL 4/19 in the Slyne basin.

Inishkea is located close to the one trillion cubic feet producing Corrib gas field and associated infrastructure.

Because of that, the company said it regarded Inishkea as lower risk “infrastructure-led” exploration, and had assigned gross unrisked prospective resources of 1.5 trillion cubic feet, and an estimated geological chance of success of one in three to the prospect.

In tandem with ongoing farm-out discussions, the site survey process for a drilling location at Inishkea was being advanced.

The firm said it was hoping to obtain permission for the survey to be conducted during summer 2020, which would enable drilling to occur during 2021.

“With gross unrisked prospective gas resources of 1.5tcf, a one in three chance of success, a location in a proven hydrocarbon region and lying close to the producing Corrib gas field, Inishkea represents a compelling drill target, one that continues to attract considerable interest from a number of potential partners,” said executive chairman and interim chief executive officer Simon Oddie.

“While we cannot comment on timings for the conclusion of ongoing discussions, we remain optimistic that we will secure a partner for Inishkea with whom we can drill what has the potential to be a transformational well for Europa.

“In the meantime, activity continues across our asset base including working with our partners to bring the Wressle field in the UK into production later this year at an initial gross rate of 500bopd as well as technical work in Morocco focused on reprocessing and interpreting data to build a prospect inventory.”

At 0943 GMT, shares in Europa Oil & Gas Holdings were down 28.65% at 1.86p.