Big picture - Why invest in Europa Oil & Gas (Holdings) Plc
Europa Oil & Gas (Holdings) Plc Snapshot
Europa's objective is to generate substantial shareholder value by finding and producing oil and gas. To increase the probability of success whilst managing risk, a disciplined approach to the management of the Company's hydrocarbon assets is applied at all stages of the life of a licence. The Company is committed to taking commercial decisions on the entire asset base with management focused on exiting projects at the point of maximum value for investors through the rigid application of a drill, drop, dilute or divest policy. Europa's highly prospective exploration portfolio is actively managed with each project being subjected to first class technical as well as commercial analysis allowing management to make informed decisions on whether individual projects ought to be pushed down the exploration and production funnel or out of it.
Management recognises the need to continually repopulate and replenish the asset base with new licences as existing projects are progressed along the development curve. An acceptable risk/reward profile for an individual project depends on its impact on the overall portfolio, the balance of assets at the time and the objective of the Company. Industry leading portfolio management methodologies are deployed to ensure the risk/reward trade- off inherent in the portfolio is transparent to ensure shareholder value is maximised.
Europe is the current geographic focus. However management is prepared to evaluate and acquire quality assets wherever they become available preferably in countries that are politically stable, have transparent licensing processes, and offer acceptable commercial terms.
Production - UK
The Company produces from three oilfields in the East Midlands - a 100% working interest in both the West Firsby and Crosby Warren fields and a 65% non-operated interest in Whisby. Overall daily production is stable at approximately 140 barrels of oil, all of which is transported by tanker to the refinery at Immingham in NE Lincolnshire.
The West Firsby Field, which commenced production in 1991 and is 15km north of Lincoln, is the main operating base with two wells producing ~70bopd. The Crosby Warren field started production in 1987 and is located in the grounds of the steelworks at Scunthorpe. Two production wells operate here on traditional beam pumps or 'nodding donkeys', producing ~30bopd. The Whisby well, which is just to the west of Lincoln, was drilled by Europa in early 2003 and produces ~60bopd gross via a beam pump (~40bopd net to Europa).
Ongoing reservoir engineering studies are being undertaken on Europa's UK producing assets to determine future work programmes and investment levels.
Monthly oil production for Crosby Warren, West Firsby and Whisby is provided to DECC (Department of Energy and Climate Change) using the UK PPRS "Petroleum Production Reporting System". The data can be viewed on the DECC website.
Exploration - UK
Europa is involved in a number of exploration licences in the UK:
The Wressle prospect is located in PEDL180 in the East Midlands Petroleum Province. Europa has a 33.3% working interest share in the prospect with its partners Egdon Resources 25%, Celtique 33.3% and Union Jack 8.3%.
The Wressle-1 conventional exploration well was drilled to a total depth of 2,240 metres (1,814m TVDSS) on 23 August 2014.
Both the stratigraphy and reservoir horizons encountered by the well were in line with the pre-drill geological forecast.
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PEDL181 (Kiln Lane)
The Kiln Lane well spudded on 23 February 2015 and reached a total depth (TD) of 2,291 metres on 19 March.
Sandstones in the Westphalian and Namurian intervals were penetrated in line with the pre-drill geological model and significant oil and gas shows were observed during drilling operations.
However, wireline logging and subsequent petrophysical analysis indicates that the sandstones encountered are water wet.
The Well will therefore be plugged and abandoned and the site restored to agricultural use.
The Broughton prospect is located in the East Midlands Petroleum Province and was previously drilled by BP who found oil. Broughton has estimated mean gross unrisked recoverable resources of 1.85mmbo. Working interest shares are as above. 49 sq km of 3D seismic acquisition has been processed.
The Holmwood prospect located in the Weald Basin, Surrey, has mean gross recoverable resources of 5.64mmbo. The licence covers an area of 5 sq km and is a Jurassic carbonate and sandstone project with a relatively low geological risk profile.
Europa has a 40% working interest in the licence, Egdon Resources 38.4%, Altwood Petroleum 1.6%, and Warwick Energy 20%.
The prospect lies south of Dorking within the Surrey Hills Area of Outstanding Natural Beauty and an application to construct a temporary exploration well on the site was originally made in 2008.
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Europa holds two permits in the Aquitaine basin: Bearn des Gaves and Tarbes Val d'Adour.
Bearn des Gaves (100%)
Europa holds a 100% interest in the onshore Bearn des Gaves permit in the Aquitaine basin, the heartland of the French oil industry. The permit contains two prospects: Berenx Deep and Berenx Shallow.
Berenx Deep is an appraisal project having previously been explored and drilled by EssoRep with two wells, Berenx-1 (1969) and Berenx-2 (1972), both encountering strong gas shows over a 500 metre thick gas bearing zone. In 1975 Berenx-2 was re-entered, drill stem tested and flowed gas to surface from the same carbonate reservoir that delivered 9 tcf and 2 tcf from nearby fields at Lacq and Meillon.
Tarbes Val d'Adour (20%)
In February 2015, Europa announced the signing of a Farm-Out Agreement (FOA) in relation to the Tarbes permit with Vermilion REP SAS, a wholly owned subsidiary of Vermilion Energy Inc (Vermilion) a Calgary, Alberta based international oil and gas producer. Tarbes has previously produced oil from two fields and is located in the Aquitaine basin close to the giant Lacq - Meillon gas fields.
Porcupine Basin FEL 2/13 and FEL 3/13 - Europa (15%); Kosmos Energy Ltd (85% and operator)
The exploration model for these licences is the Cretaceous stratigraphic play: comprising Early Cretaceous turbidite sandstone reservoirs; charged by mature Late Jurassic and Early Cretaceous source rocks and contained in stratigraphic traps with elements of structural closure. The Cretaceous play in Ireland is essentially undrilled and is considered to be analogous to the same play in the equatorial Atlantic Margin province that has delivered the Jubilee and Mahogany oil fields. The plays in both blocks involve the presence of Early Cretaceous turbidite sandstone reservoirs, charged by mature Late Jurassic and Early Cretaceous source rocks and contained in stratigraphic traps. The trapping configurations are analogous to the Jubilee and Mahogany oil fields in the equatorial Atlantic Margin province. Oil prone marine source rocks are anticipated in the Late Jurassic and Cretaceous intervals.
In April 2013, Europa farmed out an 85% interest in both licences to Kosmos Energy, regarded as a pioneer of the Cretaceous plays. Under the terms of the farm-in, Kosmos fully funded the costs of a 3D seismic programme over both FELs and for which acquisition was completed in October 2013 and final processed data delivered in April 2014. Europa has now received a new prospect inventory from Kosmos based on state of the art 3D seismic and this includes the identification of a number of new, large prospects and leads on both licences. As a result, material changes have been made to the prospectivity previously mapped on the licences using historic 2D seismic data.
Hugh Mackay, CEO
Hugh, a geologist who joined Europa in 2011, has a wealth of experience in the oil and gas sector, including eight years at BP in a variety of roles in the UK, Oman and Egypt, then at Enterprise Oil in leadership roles, culminating as head of the SE Asia division. Hugh sold the Peak Group to AGR ASA for $50 million and founded Avannaa Resources, a leading mineral exploration company in Greenland. Hugh has a BSc in Geology from the University of Edinburgh and a Sloan MSc in Management from London Business School.
Phil Greenhalgh, Finance Director
Phil graduated from Imperial College with a BEng in chemical engineering and subsequently became a member of the Chartered Institute of Management Accountants. He began his financial career as Financial Controller with Kelco International, a subsidiary of Merck & Co. He moved to Monsanto plc before becoming Finance Director with Pharmacia Ltd. He moved to Whatman plc, a FTSE 250 company, where he led the financing of a €50m company acquisition, oversaw a substantial share price recovery and was a key player in the Whatman turnaround.
William Ahlefeldt, Non-executive Director
William helped take Europa onto AIM and remains its largest shareholder. He started his career at Maersk as a petroleum engineer followed, in 1987, by IPEC, a London based consultancy, where he was responsible for field reserves estimations. In 1990, he became an independent consultant, undertaking field and portfolio evaluations for acquisitions and field development work on a range of projects in the North Sea, former Soviet Union and Middle East. He is also the founder of IFX Infoforex. William has continued to be active in petroleum engineering consulting, carrying out portfolio evaluations and project management.
Colin Bousfield, Non-executive Chairman
Colin is an Associate of the Chartered Institute of Banking having spent over 30 years in banking with Barclays, Bank of Scotland, RBS and Commonwealth Bank of Australia, primarily involved in providing finance and corporate advice to oil and gas companies. Colin was CFO for a private unconventional resources group active in Europe, Composite Energy, prior to its sale to Dart Energy Ltd of Australia. He was then CFO for a European onshore drilling services company, Geometric Drilling Ltd, prior to its sale to the Entrepose Contracting group.
Roderick Corrie, Non-executive Director
Roderick is a graduate of Cambridge University and an Associate of the Chartered Institute of Banking. He is a strategic adviser and financier with a variety of companies and holds or has held executive or non-executive roles in corporate finance, strategic advice, TV advertising, financial services, health, property, internet services, mineral exploration & development, investment and manufacturing companies.