Nu-Oil's Enegi making progress on 'more complex' farm-in agreement

The AIM-traded firm said Enegi holds a 100% working interest in the PL2002-01(A) lease area, which lies over the Garden Hill field.

It said discussions were continuing between the parties in respect of entering into a definitive farm-in agreement, which would fund the next phase of development and “optimise” the operational and ownership structure for the longer-term success of the project.

Negotiations had reportedly identified opportunities to create local infrastructure which, in the long run, was expected to reduce costs and minimise disruption caused by the lack of a local supply chain.

Nu-Oil said incorporating that could require a “broader and more complex” agreement, possibly incorporating further entities.

The company said it was encouraged by the progress made to date with PVF and other unnamed parties, in particular the ambition to develop wider opportunities in the region.

Enegi was apparently working to conclude a farm-in agreement as a priority, with Nu-Oil saying it would update the market as and when appropriate.

For the avoidance of doubt, Nu-Oil confirmed all parties remained “fully committed” to restoring production from the PAP#1-ST#3 well, with ongoing operations not affected by the discussions.

“We believe that building infrastructure at and around Garden Hill with strategic partners makes this the cornerstone project that unlocks more opportunities for Enegi in the region; we are considering the farm-in agreement in this wider context,” said Nu-Oil chairman Alan Minty.

“Thus, we would use a consortium model to develop onshore assets in western Newfoundland mirroring the company's offshore marginal field initiative.

“We have chosen to explore this because the successful implementation of such an approach would reduce costs and potentially amend farm-in terms for the benefit of the company.”