OIL and gas explorer Trap Oil Group, which trades as Trapoil, is to farm out its UK North Sea Kew field to Centrica and Japan’s JX Nippon.
The deal with Centrica and Nippon – announced today – will see Trapoil’s seismic and appraisal well drilling costs, estimated to be £8million, carried by two new partners on the northern North Sea development.
Kew, described as an undeveloped gas-condensate discovery, is one of a number of assets bought by alternative investment market-listed Trapoil as part of its acquisition of Banchory-based Reach Oil and Gas for £30million in July.
Centrica and Nippon have made a payment of £2.75million to Trapoil in return for 80% and 20% of the field respectively.
They will also pay for the reprocessing of seismic data on the field and an appraisal well, expected in 2013 and estimated to cost £40million in total.
If Centrica, which would become operator, and Nippon decide not to drill an appraisal well or develop the field, they will have to pay more.
Trapoil finance director David Kemp said: “We think this is a great deal. We have brought in a blue-chip operator, which has recently shown its commitment to the North Sea.
“In terms of taking the project forward, it could not be a better deal.”
The farm-out is subject to Department of Energy and Climate Change approval.
Trapoil is due to drill a well on its Orchid prospect in the central North Sea at the end of this year using the Sedco 704 rig. Overall, it has a seven well drilling programme planned for next year.
Trapoil said Kew was a Brae-style submarine fan play analogous to the Devenick field located on trend to the south.