Europa Oil & Gas, the UK, Ireland and Morocco focused company said that the company, along with partner Cairn Energy, will relinquish their interest in a licence option in offshore Ireland’s South Porcupine Basin where is sees limited prospects.
The decision “follows the completion of the agreed work programme, including a full technical assessment, which concluded that the prospectivity of the licence option 16/19 is limited,” Europe said in a statement, adding that the relinquishment will have negligible impact on the value of Europa’s portfolio.
After farming out a 70 per cent interest to a subsidiary of Cairn Energy in March 2017, Europa retained a 30 per cent interest in the licensing option.
As part of the terms of the farm-out, Cairn funded a seismic acquisition programme which was completed in 2018. As a result, Europa’s accounting carrying cost for was limited to £94,000, which will be written off in the current period.
The company estimates that relinquishment will result in the avoidance of full year costs of £105,000, based on Europa assuming 100 per cent ownership and converting the LO into a Frontier Exploration Licence (FEL).
Simon Oddie, interim chief executive officer and executive chairman of Europa, said: “In LO 16/19’s case, the decision has been taken by both partners to relinquish the acreage. As this demonstrates, our exploration model is centred on potentially exposing Europa to high reward wells while at the same time minimising cost and risk. This is what we are looking to achieve at our flagship 1.5 tcf Inishkea prospect in the Slyne Basin.”
Following the decision, Europa’s licence position offshore Ireland comprises five 100 per cent-owned licences. Multiple targets have been identified on seismic data across the licences. Combined, these have the potential to host gross mean un-risked prospective resources of 5.7 billion barrels oil equivalent in addition to the 1.5 tcf gas assigned to Europa’s flagship Inishkea prospect on FEL 4/19 in the Slyne Basin.
Inishkea, which lies close to the 1tcf producing Corrib gas field and associated infrastructure, has an estimated geological chance of success of one in three and is viewed as “infrastructure-led” exploration.
Oddie said the farming out Inishkea and other FELs 1/17 and 3/13 is just one workstream being advanced not just in Ireland but across its asset base in onshore UK and offshore Morocco. “In the UK, we are working with our partners to bring the Wressle field into production later this year at an initial gross rate of 500 bopd and in the process more than double Europa’s net production to over 200 bopd, while offshore Morocco a programme is underway to de-risk targets already identified on our recently acquired acreage,” he said, adding that the company is also seeking to add a third area to our portfolio in the appraisal/development part of the business.