Europa Oil & Gas (Holdings) Plc signed a farm-out agreement concerning its 40% interest in the PEDL143 license in the Weald Basin with Union Jack Oil and Gas Plc (UJO), the company said May 23.
PEDL143 contains the conventional Holmwood prospect, which has 5.6 million barrels (MMbbl) of oil, estimated, in gross un-risked prospective resources in the Portlandian and Corallian sandstones and a P90 - P10 range of resources of 1 MMbbl to 11 MMbbl of oil.
PEDL143 is in an area of the Weald Basin where 14 oil and gas fields have been found, resulting in the discovery of an estimated 50 MMbbl of oil; of that amount, 30 MMbbl have been produced to date.
A deviated exploration well will be drilled at Holmwood; drilling operations are scheduled to begin in late 2016 or in 2017.
Under the farm-out, UJO will acquire a 7.5% working interest in PEDL143 from Europa, paying 15% of the costs to drill the exploration well at Holmwood.
Europa will pay 25% of those costs up to a gross cost of 3.2 million British pounds. UJO will pay 7.5% of the costs above the 3.2 million British pound cap, and Europa will pay 32.5%
Holmwood is 5 kilometers (km) south of the Brockham oil field that produces oil from Portlandian sandstone reservoirs.
It is also 12 km west of the Horse Hill-1 well in PEDL137, where UK Oil & Gas Investments is producing more than 1,688 bbl/d of oil from the Upper and Lower Kimmeridge limestone reservoirs and Upper Portland sandstone reservoir.
The Holmwood well will use similar stratigraphy to Horse Hill, targeting oil in the Upper and Lower Kimmeridge limestones and the Corallian and Portlandian sandstones. Europa said that prospective resources at Holmwood do not include any estimate for Jurassic limestones found to be producing in Horse Hill.
If petroleum is discovered on the license, UJO will make a deferred payment of 159,375 British pounds to Europa covering back costs plus a 25% uplift.
Subject to approval of the farm-out from the Oil & Gas Authority, Europa will retain a 32.5% interest in, and operatorship of, PEDL143 alongside Egdon Resources (18.4%), Altwood Petroleum (1.6%), Warwick Energy (10%), UKOG (30%), and UJO (7.5%).
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