Europa Oil & Gas (Holdings) Plc (AIM:EOG) shares began Tuesday notably higher, after it announcing its subsidiary company Antler Global Limited had signed a binding farm-out agreement covering the EG-08 production sharing contract offshore Equatorial Guinea.
The agreement transfers a 40% working interest to Fuhai (Beijing) Energy Limited. Under the terms, Fuhai will fund 95% of the Barracuda well costs up to a cap of $53 million, with Antler funding the balance.
Antler will retain operatorship, while any cost overruns above the cap will be shared equally.
“This is a significant milestone for Europa and I am delighted to have entered into this agreement with Fuhai," Europa chief executive Will Holland said in a stock market statement.
Holland described Fuhai as "undoubtedly an excellent partner" and said the deal is the culmination of three years of hard work.
"The farm-in is without question a great result for Europa and equates to a 2.38 for 1 carry which reflects the quality of the asset, namely the high chance of success and the size of the resource potential," Holland said.
He added: "2026 is going to be a pivotal year for Europa and I look forward to updating the market as we secure the necessary approvals to conclude the transaction and continue to make progress with our plans to spud the Barracuda well."
In London, Europa shares started Tuesday more than 10% higher and saw an intraday high of around 2.29p.