Europa Oil & Gas, the UK and Ireland focussed exploration, development and production company, today confirmed the sale of its 50% interest in Promote Licence P2304 (UKCS Block 41/24) to Egdon Resourcesfor £1.45million.
Europa’s joint venture partner Arenite Petroleum has also sold its 50% interest to Egdon as part of the same transaction.
P2304 is located to the immediate south of Egdon’s 100% owned licence P1929 (UKCS Blocks 41/18 and 41/19) offshore North Yorkshire.
Europa’s CEO, Hugh Mackay, said: “The sale of our interest in P2304 eliminates our exposure to ongoing costs whilst retaining our exposure to future drilling success. Furthermore, combining P2304 with Egdon’s licence is anticipated to enhance the possibility of delivering farmout success to the benefit of all parties to the transaction.”
Under the terms, Egdon is responsible for the immediate reimbursement of the 2017 licence rental, OGA Levy and vendors’ legal costs, £15,000 in total, and future staged payments that have the potential to total £1.45million gross contingent consideration on the successful completion of various potential exploration activities and/or on reaching certain production milestones.
The deal includes a £50,000 cash payment on completion of the acquisition of a 3D survey over any part of the licence, a £100,000 cash payment on completion of the drilling of the first well located wholly or partly within the area covered by the licence, a £100,000 cash payment on first production, other than testing, from any well located wholly or partly within the area covered by the licence, a £200,000 cash payment on reaching a total production of 5 billion standard cubic feet of gas (‘bcf’) (or oil equivalent) from any wells located wholly or partly within the area covered by the licence and a £1,000,000 cash payment on reaching a total production of 20 bcf (or oil equivalent) from any wells located wholly or partly within the area covered by the licence.
Mr Mackay added: “Today’s disposal is in line with our strategy to optimise the risk / reward trade off across our onshore UK and offshore Ireland exploration portfolio. We continue to focus on securing farm outs, specifically within our industry leading portfolio of offshore Ireland licences, and I look forward to providing further updates in due course.”
The transfer of interests in P2304 from Europa and Arenite to Egdon is subject to OGA approval.