A study underlines the huge potential of Europa Oil & Gas’s (LON:EOG) share of an exploration licence in the Atlantic waters off the coast of Ireland.
Consultant ERC Equipoise estimates the AIM-listed explorer and producer’s 15% interest in three prospects within frontier exploration licence 3/13 to be an unrisked US$1.6bn.
The mean, risked NPV (net rpesent value), meanwhile, is put at US$251mln. It ascribes a 19% chance of success to the Wilde prospect, 15% to Beckett and 13% to Shaw.
The ERC Equipoise study follows a competent person's report which suggests licence 3/13 could be host to unrisked 1.49bn barrels.
“These prospects are at the pre-drill stage and realisation of this potential value will require the drilling of exploration wells,” Europa cautioned.
However, the latest data points to the huge potential offshore Ireland, where super-explorer Kosmos the licence operator, and as chief executive Hugh Mackay said, the prospects offer “very significant potential upside in the event of exploration success”.
Meanwhile, the downside is mitigated by the terms of Europa’s 2013 farm-out agreement with Kosmos (NYSE:KOS).
The US-listed giant will incur all the costs of drilling a well subject to a US$110mln investment cap.
The excitement around Europa’s Irish asset ignores the fact the company has enjoyed success onshore.
In March the Wressle well in East Lincolnshire underwent a fourth flow test, which has brought cumulative production to 710 barrels oil equivalent per day.
This made Wressle one of the major onshore discoveries in recent history.