Proactiveinvestors United Kingdom Europa Oil & Gas

Shale seen as potential solution to UK's energy crisis

Mon, 07 May 2012 13:30:00 +0100

The fact that oil giant Royal Dutch Shell (LON:RDSB) confirmed in recent weeks its interest in UK shale points to the growing significance of this energy source.

Finance chief Simon Henry was quoted as saying Shell was "taking a look" at the potential in the UK stating that unproven estimates of 200 trillion cubic feet meant it was a "play" the oil major "could not ignore".

But Henry also nodded to the environmental and social challenge involved in fracking the gas (the process to extract it from the rock) - a technique which has recently hit the headlines.

Exploration is still in its infancy but two years ago a British Geological Survey (BGS) study concluded that the shale gas potentially recoverable for the UK could be 5.3 trillion cubic feet - a far cry from the 200 trillion figure, but nevertheless, a huge amount.

To put the figure into context, this is almost two years' worth of the UK's overall gas consumption.

Shale gas could really come into its own as the UK's energy debate looks set to continue and more and more money is spent on phasing out traditional methods of producing energy.

Coal-fired power is being eased out, which leaves gas at the top of the list of alternatives. But the nation is currently a net importer of gas from places like Russia and Norway, leaving it exposed to the whims of international markets.

This means producing it from the country's own resources has never been so important.

Shale is a type of fine rock in which the gas lies, and, to extract it, a process called hydraulic fracturing, or "fracking" is used. This sees fluid pumped into the rock to create fractures to allow the gas to come out.

Previously, such reservoirs were not exploited by firms as they were thought to be economically unattractive.

But all that has changed with the development of US horizontal drilling technology, which transformed the economics, and indeed, shale gas production across the pond has increased rapidly in the last three years.

By 2035, it is expected to account for 50 per cent of US output.

So called "fracking" has certainly been in the spotlight recently, not least due to the large number of people, here in the UK, who oppose the process on environmental grounds.

Last year, privately owned company Cuadrilla Resources made a huge shale discovery near Blackpool - reportedly big enough to supply the UK for 56 years.

Its work was responsible for what residents of the seaside town described as two ‘earthquakes’ and the firm's drill programme was put on hold.

Last month, however, it was given the green light to drill again, but under tighter regulatory controls.

Director General of the Institute of Directors Simon Walker had said at the time of the drilling resumption that shale gas was a low-cost fuel offering, "a great opportunity to fill the energy gap left by the closure of coal-fired power stations and the unreliability of renewables".

The go ahead for Cuadrilla also put two AIM quoted stocks, IGas Energy (LON:IGAS) and Europa Oil & Gas (LON:EOG) into focus and shares in both companies went up.

In January this year, IGas found what it described as a very "significant" amount of shale gas in a well in Cheshire, which was targeting coal bed methane (CBM) - another form of unconventional natural gas. The Ince Marshes well is only a few miles away from Cuadrilla’s operations.

Meanwhile, Europa has more than 600 square kilometres of prospective shale gas acreage in the Humber basin, near its conventional oil production operation.

While this acreage is being evaluated, Europa says it plans to monitor the other shale gas exploration activities with interest.

Another company, focused on unconventional gas, is Australia-listed Dart Energy (ASX:DTE), which is restructuring its operations in Britain.

In a recent announcement, it said it had decided to take up an option over two licences in Germany, Saxon 1 and 2, offered by BG, as part of this restructuring.

Both licences are believed to be prospective for both CBM and shale with a multi-TCF gas in place potential in aggregate. The licences were acquired for no cost.

While the precise way in which UK shale gas will shape the country's future energy needs is uncertain, what is clear is that is likely to remain firmly on the news agenda for some time to come.

Europa Oil & Gas intends to deliver on promises and ‘walk the talk’

Thu, 26 Apr 2012 09:58:00 +0100

New Europa chief Hugh Mackay is awaiting a new CPR report to establish an independent valuation, which he hopes will anchor the share price going forward.

Europa Oil & Gas prepares for high impact drilling after strong start to year

Thu, 19 Apr 2012 15:38:00 +0100

After a strong start to the year Europa now has plans for a high impact drill programme in the UK and it is in talks to bring partners into its French operations.

Europa Oil & Gas looks at drilling up to 3 high-impact wells in next 18 months

Thu, 19 Apr 2012 08:35:00 +0100

Europa Oil & Gas (LON:EOG) is looking at drilling drill up to three high impact wells in the UK over the next 18 months.

In its interim results statement, the group said this work is anticipated to commence in the second half of this year with the Wressle prospect in the UK, which it rates as having a one in three chance of adding materially to its current oil production average of approximately 200 barrels per day.

In addition, discussions are progressing towards conclusion of two farm-out agreements which could lead to a further two wells in the next 18 months.

During the six month period to January 31 2012, Europa saw a 61 per cent increase in revenues to £2.4 million compared to £1.5 million a year earlier.

A 23 per cent year-on-year increase in volumes to 187 barrels of oil per day during the period combined with a 39 per cent increase in the oil price lay behind the strong performance.

The contribution from the West Firsby WF-9 well along with reduced downtime caused by breakdowns, drilling activities and adverse weather also contributed to the jump in production.

Since the period end, the good performance of the UK producing assets has continued: February production was 231 bopd, the highest monthly production rate since November 2008, and in March, the average was 222 bopd.

Europa’s appeal against Surrey County Council refusing permission to drill an exploration well to test the Holmwood prospect on the PEDL 143 licence is due to be heard in July 2012.

Subject to a favourable ruling, the company is looking to drill the exploration well in 2013.

In France, it holds 100 per cent interest in two permits with both development and
exploration potential in the Aquitaine Basin, adjacent to the producing Lacq-Meillon gas fields.

The Béarn des Gaves permit contains a sizeable deep gas play that has previously been explored by operator Elf in the 1980s. Re-interpretation of existing seismic has identified a previously unknown shallow gas play.

Europa has divided the licence into a deep and shallow play and is in talks with potential partners for both the shallow and the deep gas play.

At the same time, farm-out discussions are ongoing with potential partners for the Tarbes Val d'Adour permit.

Following its withdrawal from the Cuejdiu licence in Romania since the end of the first half, Europa has interests in two further concessions in Romania, wholly owned Brates and 19 per cent in Bacau.

Bacau is operated by Raffles Energy and a review of existing data is currently underway.

Europa also holds interests in Western Sahara licensed by the Sahrawi Arab Democratic Republic. The 100 per cent held licence covers almost 80,000 square kilometres and has significant potential for both conventional and unconventional gas resources, specifically shale gas.

The company is currently looking to farm-out its interest in the licence and an announcement will be made in due course.

RNS press release - Interim Results

Thu, 19 Apr 2012 07:00:00 +0100

Europa Oil & Gas continues repositioning with Cuejdiu project withdrawal

Thu, 22 Mar 2012 14:13:00 +0000

Chief executive Hugh Mackay explained that Europa remains focused on advancing and developing its core assets. And it is continuing talks regarding a potential farm-out of its wholly-owned Barchiz project, in Romania.

RNS press release - Withdrawal from Cuejdiu Licence in Romania

Thu, 22 Mar 2012 09:07:00 +0000

Europa Oil & Gas boosted by higher output and prices

Wed, 08 Feb 2012 07:28:00 +0000

UK-onshore oil group Europa Oil & Gas (LON:EOG) saw first half revenues jump by almost two-thirds as output and prices both rose.

Turnover jumped by 61 per cent to £2.1 million in the half year to January 31 as volumes from its three producing fields rose by 23 per cent to 187 barrels per day.

Income was also boosted by a 39% rise in oil prices to US$108.9 per barrel.

The company currently has three producing assets all located in the East Midlandsand consisting of a 100% working interest in the West Firsby and Crosby Warren fields and a 65% working interest in the Whisby 4 well.

Higher output reflected the West Firsby WF-9 well coming on stream and reduced downtime after the blizzards had affected the the previous year.

Hugh Mackay, chief executive, added that daily production has been consistently higher than the previous year despite a recent workover programme for the West Firsby 7 well.

“Our UK production continues to generate more than enough cashflow to cover our operating costs and provides a solid foundation from which we can develop our other highly exciting assets.”

“Little or no value is being attached to our highly prospective portfolio of exploration and development assets that include the Berenx gas appraisal project and the Tarbes Val d'Adour re-development project, both of which are located in France.”

Management is committed to realising the inherent value of Europa’s portfolio, he added.

RNS press release - Significant Increase in H1 Production and Revenues

Wed, 08 Feb 2012 07:00:00 +0000

Europa Oil & Gas: West Firsby-7 production restarts; to relinquish stake in Brodina concession

Fri, 20 Jan 2012 07:31:00 +0000

Europa Oil & Gas said this morning that production has restarted from the West Firsby-7 well in the East Midlands after a workover.

RNS press release - Update on UK Production and Romanian Interests

Fri, 20 Jan 2012 07:00:00 +0000

RNS press release - Holdings in Company

Thu, 05 Jan 2012 13:30:00 +0000

Europa Oil & Gas expects West Firsby 7 well back online early 2012 after brief suspension

Fri, 16 Dec 2011 16:20:00 +0000

Europa Oil & Gas (LON:EOG) has suspended production at the West Firsby 7 well in the East Midlands, UK, but has taken action and expects the well to be back in production early in the New Year.

The group told investors that the well has been shut in due to a suspected hole in a section of the tubing.

A workover programme is being submitted to the Health & Safety Executive for approval and a rig has already been booked to carry out the necessary repairs. There is no evidence of any leakage of oil at the site and the company anticipates that West Firsby 7 will be back in production early in the New Year.

Prior to the shutdown, the average daily production had been running at approximately 200 barrels of oil per day (bopd). As a result of the temporary shutdown of West Firsby 7, daily production is now running at 130 bopd.

Assuming the workover programme is completed on schedule, Europa expects daily production for the six months to January 31 2012 to average 185-190 bopd.

Chief executive Hugh Mackay said: "I am confident that the swift action we are taking to resolve the issue will limit the overall impact of the shutdown on our first half's production levels.

“In the meantime, we are continuing with our strategy of progressing our high quality exploration portfolio through the development cycle and I look forward to reporting significant progress in this regard to the market in the New Year."

Europa has a diversified portfolio of multi-stage hydrocarbon assets that includes production, exploration and development interests, in countries that are politically stable, have transparent licensing processes, and offer attractive terms.

The company generates sufficient revenues from UK production to cover corporate overheads.

In addition, it has highly prospective exploration projects in the UK, Ireland, France and Romania, the most significant asset being the 1.7 trillion cubic feet, US$2.2 billion Berenx gas appraisal project in onshore France.

RNS press release - Production Update

Fri, 16 Dec 2011 15:52:00 +0000

RNS press release - Result of Annual General Meeting

Tue, 13 Dec 2011 16:47:00 +0000

Europa Oil & Gas submits appeal against Holmwood planning refusal

Tue, 13 Dec 2011 07:40:00 +0000

Europa Oil & Gas (LON:EOG) said it has formally submitted the appeal against the decision to refuse planning permission for the Holmwood-1 exploration well in Surrey and has completed the sale of Europa's Ukrainian subsidiary Europa Nafta & Gas Ltd.

In a statement prepared for today’s AGM, chief executive Hugh Mackay. who joined the group in August this year, updated shareholders on the latest development for the oil and gas exploration and development company with a combination of producing and exploration assets in onshore Europe.

Europa holds a 40 percent working interest in the Holmwood-1 well. The Planning Committee of Surrey County Council refused planning permission for the well in May. Europa said at the time the the vote was very close and it plannned to appeal.

It considers the initial proposal technically strong, fully supported by the County's own planning officers and as such the refusal is thought likely to be overturned on appeal.

The PEDL143 onshore licence, which hosts the Holmwood prospect, is being explored through a joint venture. Europa is the operator, Egdon Resources have a 40 percent stake and privately owned Warwick Energy owns the remaining 20 percent.

The sale of Europa Nafta & Gas to Moltex Business Inc was completed on December 1 2011 with Europa receiving a final cash payment of US$98,750 on December 5.

In the AGM statement, Mackay said his predecessors at Europa successfully built up a highly attractive portfolio of assets at various stages of the development cycle ranging from production in the UK that generates revenues sufficient to cover the corporate overheads, to exploration licences that include a potential company-maker in the form of the Berenx gas asset in France.

“However, following a poor run in the share price over the past year, the market capitalisation of Europa at today's levels merely reflects the value of the producing UK assets. Effectively, no value is currently being placed on our highly prospective exploration assets. Admittedly, there has been poor news flow over the last year, notably in the UK
and Romania, but the quality and balance of the portfolio remains intact,” the CEO said.

He said the group is actively discussing possible farm-outs for several of Europa’s projects with a number of interested and suitable partners.

"Although 2011 has been a challenging year for the company and a highly frustrating one for our shareholders, importantly Europa continues to be profitable at the operating level and still holds highly prospective exploration licences.

“These two points lay behind my decision to not only join Europa but also to accept a remuneration package based on a share price that is considerably higher than today's levels, so aligning myself with existing rather than new shareholders. With this in mind, I am extremely excited for the future and expect to report this time next year, meaningful progress in the development of our assets,” Mackay added.

Europa Oil & Gas has assets onshore UK, Romania and France and offshore Ireland.

RNS press release - AGM Statement

Tue, 13 Dec 2011 07:00:00 +0000

Europa Oil & Gas chairman Bill Adamson buys shares in company

Tue, 22 Nov 2011 07:23:00 +0000

Chairman of Europa Oil & Gas (LON:EOG) Bill Adamson now holds 0.24 per cent of the company, it emerged.

The firm said that yesterday (November 21) Adamson bought 150,000 company shares at 6.7 pence each for around £10,000.

Following the purchase, he is interested in 325,000 shares - or 0.24 per cent of the firm's share capital.

Earlier this month, on November 15, the firm's chief executive Hugh Mackay upped his stake in the company.

He bought 132,501 shares in the company at 8.25 pence each for around £11,000, the firm told investors and now holds 0.43 per cent of the company's share capital.

Europa Oil & Gas has assets onshore UK, Romania and France and offshore Ireland.

Last month, it raised around £700,000 through an oversubscribed placing to strengthen its balance sheet and for working capital.

The proceeds, the firm said, would be used to supplement the company's existing cash resources in funding its near-term working capital requirements and to strengthen the balance sheet in the light of a Romanian VAT liability.

RNS press release - Director dealings

Tue, 22 Nov 2011 07:00:00 +0000

Europa Oil & Gas' chief executive Mackay buys shares in company

Wed, 16 Nov 2011 07:48:00 +0000

Europa Oil & Gas (LON:EOG) revealed this morning that chief executive Hugh Mackay had upped his stake in the company.

Yesterday (November 15), Mackay bought 132,501 shares in the company at 8.25 pence each for around £11,000, the firm said.

Following the acquisition, he holds 0.43 per cent of the company's share capital.

Europa Oil & Gas has assets onshore UK, Romania and France and offshore Ireland.

Last month, the firm raised around £700,000 through an oversubscribed placing to strengthen its balance sheet and for working capital.

The proceeds, the firm said, would be used to supplement the company's existing cash resources in funding its near-term working capital requirements and to strengthen the balance sheet in the light of a Romanian VAT liability.