Europa Oil & Gas (Holdings) PLC (AIM:EOG) chief executive Simon Oddie has told investors he is very excited about the outlook for 2023, as the Wressle field continues to deliver an excellent performance and joint venture partners embark upon an active year to grow the onshore UK field.
The company, in a statement, confirmed net production from Wressle in December averaged over 300 barrels of oil per day (bopd) - which remains above original expectations for the single-well field.
Wressle is this year expected to see growth, enhancement and substantially increased revenues, Europa confirmed.
Through an active work programme the joint venture partners intend to drill a second production well at Wressle which will tap the Penistone horizon - slated for the second half of 2023 - followed potentially by a further Penistone well in 2024.
Significantly, a gas monetisation programme – a planned ‘gas-to-wire’ system – is proposed to go online in the fourth quarter to increase production revenues and also eliminate routine flaring from the Wressle field.
Next year, an exploration well is also intended to test the nearby Broughton North prospect.
In the statement, Oddie commented: "We are very excited about the outlook for Europa as we enter 2023. The Wressle oilfield continues to outperform expectations and complements production from our operated assets at Crosby Warren and West Firsby and our interest in Whisby, to provide valuable cashflow to fund the ongoing development of our asset base.
“In addition, our existing cash balance and ongoing cashflow allows us to seek other opportunities, both onshore and offshore.”
Europa noted that its capex budget for 2023 is set at £5.1mln, across its asset base. It forecasts having a net cash position of around £4.6mln by the end of January, and, said pre-capex free cash flow for 2023 is estimated at around £4.2mln.
Oddie noted: “The Europa Board adopts a prudent approach, balancing the inherent risks associated with exploration, appraisal and development against the value creation of these upstream activities.
“The 2023 budget reflects this risk-assessed value-driven approach and I look forward to updating the market on our progress throughout the year."
Offshore UK, Europa said it will continue to explore options for the development of its 25% owned Serenity oil field, in the Outer Moray Firth area of the North Sea, where an envisaged development would see a subsea tie-back to Repsol Sinopec's Tain Field.
Europa noted that the project could be progressed as a ‘unitised’ development – a form of co-operation where resources that ‘straddle’ multiple licences can be developed as part of an adjacent project, and appropriate volumes of production are attributed to the next-door licence holders.
The company said such a development would be a highly material opportunity, potentially delivering net production of around 1,000 bopd to Europa.
It noted that further updates will be provided as development discussions between the Serenity and Tain partners progress.
In Ireland, Europa is progressing a farm-out process which will launch shortly with the aim of securing a partnership to advance significant gas exploration assets - known as the Inishkea prospect - in the vicinity of the Corrib field, which is Ireland’s most significant existing field.
According to Europa, Inishkea could - if successful - deliver two-thirds of the gas needed to fulfil the 2 Gigawatts of new gas-fired power generation committed to in the Irish Government's updated Climate Action Plan.
It said the neighbouring Corrib is one of the lowest carbon-intensity gases in Europe, much lower than imported from the UK, and, Europa believes it is probable that gas from Inishkea would be of similarly low carbon intensity.
Europa, meanwhile, said it continues to assess new opportunities to add appraisal and development projects as they provide significant value-accretion whilst minimising risk. As part of these efforts it is participating in the UK’s licensing round, where the application period closes later this week.