Europa Oil & Gas can sell licence to Union Jack Oil

The Oil & Gas Authority has approved the sale on a 3.34% interest in the PEDL 180 and 180 licences, which cover the Wressle discovery and Broughton North prospect to Union Jack.

Europa will retain a £5.4m 30% interest in the licences worth £5.4m, which accounts for half its current market capitalisation, alongside Egdon Resources with 25%, Celtique Energie Petroleum with 33.33% and Union Jack now with 11.67%.

The £600,000 will help fund Europa’s share of the costs associated with bringing the Wressle discovery into production in early 2017, which is expected to be at 500 barrels of oil per day.

At this level, Europa’s expected net share of 150 barrels of oil per day will more than double the the company’s existing production.

Europa chief executive Hugh Mackay said the company also holds seven exploration licences offshore Ireland, which have the potential to host gross mean un-risked prospective and indicative resources of more than 4bn barrels oil equivalent and 1.5trn cubic feet of gas, three producing fields onshore UK, which in the last year produced 123 barrels of equivalent oil per day net, and a number of exploration projects onshore UK including Holmwood in PEDL 143 in the Weald Basin.

Following the payment Union Jack’s cash balance is now about £2m and maintains that it is fully funded for other projects, the drill-ready Holmwood-1 and Biscathorpe-2 conventional wells and ongoing development costs for Wressle-1 and remains debt free.

David Bramhill, executive chairman of Union Jack, said the company was able to increase in its position in Wressle, a near term production asset where first commercial oil is expected to flow at an estimated constrained rate of 500 barrels of oil per day in early 2017, as well as providing it with further exposure to the Broughton North prospect.

He added: “The future looks bright for this project given the early 2017 production target and the additional potential for multi-development opportunities we see within PEDL 180 and 182."

Shares in Europa Oil & Gas were up 1.67% to 4.57p at 0956 GMT and shares in Union Jack Oil rose 1.76% to 0.168 at 1028 GMT.