Europa Oil & Gas looks to CNOOC well catalysts as its Irish farm-out progresses
It is awaiting an investment decision from a “major international oil company” and in the coming months CNOOC’s planned Iolar well could significantly de-risk prospects in Ireland’s Atlantic exploration frontier
Europa Oil & Gas Holdings Plc is looking forward to a potential third-party exploration catalyst offshore Ireland, with China’s CNOOC due to drill a well to test the Iolar prospect.
Exploration success in the South Porcupine basin would be significant for all companies with interests in Ireland’s Atlantic frontier, while for Europa it would specifically benefit the Kiely East (estimated at 280 million barrels) and the Edgeworth (225 million barrel) targets.
Such prospects would be “significantly de-risked” by success at Iolar, Europa chief executive Hugh Mackay highlighted the interim results statement on the 12th April.
Both Kiely East and the Edgeworth are rated as ‘drill-ready’ prospects and are part of Europa’s package of explorations assets that are available to farm-out partners.
Internally, meanwhile, the Inishkea gas prospects are now deemed to be the priority. These exploration targets are located in the vicinity of the Corrib field, Ireland’s largest field and the country’s primary source of gas.
The Inishkea portfolio will be the subject of site survey, along with Kiely East and Edgeworth, this summer. This work will be a precursor to future drilling decisions.
Europa confirmed that it is presently in talks with a major international oil company over a potential farm-out – of interests in the LO 16/20 (which hosts Inishkea), FEL 1/17 (Edgeworth) and FEL 3/13 (Beckett, Shaw and Wilde) exploration areas – and it described itself as confident that a deal can be concluded in the coming months.
It is anticipated that such a deal would see Europa’s costs fully carried on a well for each area, and the company would retain a “material” interest in the assets too.
The junior explorer noted that it is presently waiting for an investment decision to be made by the potential partner’s head office.
Highly active period
“The last six months have been a highly active period for Europa, not just in terms of the progress we are making to advance our industry-leading licence position offshore Ireland, which to date has estimated gross prospective resources of 6.4 billion barrels of oil and 1.5 tcf of gas and where negotiations are ongoing for a farm-in for three licences with a major international oil and gas company,” Mr Mackay said in the results.
“In addition, we completed a £4.3 million fundraising, which increased the institutional representation on our shareholder register to over one third.”
Elsewhere, the company is looking to Morocco for new opportunities. It is presently in the final stages of discussions with ONHYM, the National Office of Hydrocarbons and Mines, to secure a petroleum agreement.
In the UK, meanwhile, the company has completed workover operations at the West Firsby field, in order to manage the natural decline of production. West Firsby contributes six of the 90 barrels of oil equivalent currently produced within Europa’s onshore UK business.
Efforts to expand the UK business were frustrated in local government planning, with the Wressle field development continuing to stall and the Holmwood project also held up in the planning permission process.
For the latter, Europa recently transferred operatorship to partner UK Oil & Gas Plc which has enjoyed success nearby with the Horse Hill project.
In terms of financial results, Europa reported £900,000 of revenue for the six months ended 31 January and posted a £400,000 pre-tax loss. It ended the period with £4.4 million of cash.
Significant progress made
In a note to clients, analysts at SPAngel commented: “We believe EOG has made significant progress, and the coming 18 months will be a period of transformation. As with so many of the other participants in the Wressle development, such as Union Jack Oil, it’s commissioning is keenly anticipated and will be the vindication of each of the respective companies focus on its development.”
They added: “We believe that shareholders should be pleased with the position that the company is in and the way in which management is approaching its risk mitigation strategy.”
Source: Proactive Investors