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TrapOil arrangements revised after Noreco pulls out of Crazy Horse well

Trap Oil (LON:TRAP) has unveiled amendments to its agreements with Noreco, after the Norwegian energy firm said it no longer plans to drill a well at the Crazy Horse licence in the North Sea.

It means that when DECC determines the licence on Dec 12, Trapoil will have no further obligations.

Trap holds a 22% working interest (WI), including 5% carried, in Crazy Horse and a 50% WI (5% carried) in the Homer licence. Noreco, the operator, owns the remaining equity in these blocks.

Trapoil also holds 12.5% carried interest in the Romeo block, which has four other partners, including Noreco, which holds an 11.4286 paying interest.

Mark Groves Gidney, chief executive, said: "It is clearly disappointing that our commitment to drill the Crazy Horse well has not been matched by our partner but in the circumstances they currently have other priorities, which we understand."

In respect of the Homer licence, Noreco will pay all costs relating to seismic acquisition and the processing or purchase of speculative seismic data by late 2014, estimated to be around £1.5mln, and Noreco will provide Trapoil with a carried interest of 10% through the operations on the first well, should one be drilled on the Homer licence.

This will replace the firm's existing 5% carried interest.

Meanwhile, Noreco will assign to Trapoil its entire 10% working interest in the Romeo licence. As a result, Trapoil's existing carried interest in the licence will fall to 9.375%.

Groves Gidney noted that after taking account of these proposed transactions, Trapoil's current total outstanding commitments to all third parties have now been reduced to approximately £3mln, being 20% paying interest in the Niobe well, which is scheduled to be drilled in 2015, and some seismic on its Valleys licence.

"With continued positive net income from Athena and a healthy bank balance the company is in a sound financial position to consider future activity, including any remedial work at Athena and fresh commitments to explore with our new partners," he said.

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