Early last year Hugh Mackay, the chief executive of small cap Europa Oil & Gas (LON:EOG), described 2014 as potentially transformational.
Well, the transformation has continued well into 2015, as the full cycle junior has firmed up activity in some of its diverse operations and established clarification of value in a key project.
In terms of near production, the latest excitement concerns an extended well test (EWT) at the Wressle discovery in Lincolnshire.
The company has told investors that one of the zones at Wressle might hold less water and more oil than it previously thought.
Testing of four zones was conducted at the field last year with a combined flow rate of 710 barrels of oil equivalent a day (boepd).
Europa holds 33.3% of Wressle and the output, once the field is developed, will add to the company’s existing production and thus cash flow even with tumbling oil prices.
It currently produces hydrocarbons from six wells across three fields UK onshore fields close to Wressle.
They are Crosby Warren (100% interest), Whisby (65% interest) and West Firsby (100% interest). The fields are expected to meet full year production expectations of 144 boepd.
In development, Europa seems finally to have gained permission to drill on the Holmwood field on production, exploration and development licence forty three (PEDL43), which covers an area of 92sq km of the Weald Basin in Surrey.
Europa is the operator of Holmwood with 40% of the action and UK Oil & Gas Investments holding (UKOG) a 20% stake.
A competent persons report (CPR) three years ago estimated Holmwood to hold gross mean recoverable resources of 5.64 million barrels of oil (mmbo).
With a 1 in 3 chance of drilling success, Europa views Holmwood as one of the best undrilled conventional exploration prospects in the UK.
But drilling on Holmwood, which is close to the Horse Hill project that has become controversial because of fears there might be fracking on the acreage, has been subject to interminable delays because of planning permission rejections from Surrey County Council as well as appeals and court hearings.
But authority for a surface site for a conventional deviated well has come through and a decision on the underground site path, which Europa believes will be positive, is expected on 23 September.
UKOG, which as it happens is the operator at Horse Hill, earned its 20% working interest in Holmwood in exchange for agreeing to pay 40% of the deviated well. Europa, which is in the midst of a £3.4mln fund raise, will be able to meet its share of costs.
In the UK, Europa was cheered recently by the award of Block 41/24 in the Southern North Sea in the latest offshore licensing round and is keenly awaiting the result of its applications in the 14th onshore licensing round.
All this UK activity represents positive movement, but Europa could also gain uplift from its interests in France.
Europa holds 20% of the Tarbes val d’Adour permit located in the Aquitaine basin close to the giant Lacq –Meillon gas fields.
Europa has signed a farm-out agreement with Vermillion Energy whereby the latter will acquire an 80% interest in Tarbes and operatorship in exchange for assuming 100% of the cost of a work programme up to a total of Euros 4.65 mln. Europa will retain its 20%.
There is also the onshore 100% holding in the Bearn des Gaves (Berenx) permit, again in the Aquitaine Basin. A farm-out process is ongoing in parallel with planning and permitting for a Berenx shallow well to evaluate the 107bcf gross mean un-risked contingent resources (in-house estimate).
But it is the holdings in Ireland that Europa believes could be company- making. Europa has interests in two licences FEL2/13 and FEL 3/13 in the Southern Porcupine Trough in the Atlantic Ocean offshore, Western Ireland.
A long awaited competent persons report (CPR) from the highly respected assessors has ERCE estimated one permit, 3/13, holds gross un-risked mean prospective resources of 1.49 bn of boe.
NYSE major Kosmos Energy has farmed in for 85% of the licence and operatorship, leaving Europa with 15%.
Three prospects have been identified, Shaw, Wilde and Beckett. Shaw has been singled out as the lead prospect and Europa will be carried 100% by Kosmos for a well here up to a cap of US$110mln. The well could be drilled in 2017.
Meanwhile, Europa asked ERCE to come with a valuation of the asset. Hugh MacKay said they set a price tag of US$1.6bn. House broker finnCap said that as Kosmos has yet to set a firm drilling date and is looking for a farm-in partner they have risked the valuation at 75% and set a target price for the company of 44.3p.
Dougie Youngson the oil and gas analyst at finnCap said most of the price was down to the Irish asset. Europa shares are currently trading at a 52 week low of 4.63p.