Europa Oil & Gas (LON:EOG) has indicated a high level of industry interest in its Irish offshore venture, ahead of opening its data-room to potential partners in January.
The company, in a statement ahead of today’s AGM, said the data-room would open on January 11 and already slots for January and February are almost fully booked.
“The response we are getting from major and mid-cap companies is highly encouraging,” said chief executive Hugh Mackay.
“Combined with the record number of applications in the latest Irish Atlantic Margin Licensing Round in which Europa lodged multiple applications, we clearly are not alone in recognising the enormous potential of the South Porcupine Basin.”
It intends to secure a new partner for the venture to fund a potential ‘playmaking’ well at the earliest possible date, in order to take advantage of dramatically lower rig rates.
The Irish offshore opportunity, where exploration prospects are estimated in excess of 1.5bn barrels (with a 100% stake valued at about US$7bn or 600 times Europa’s current market value), is described by Mackay as a potential home run.
Whilst he says the Irish project is a potential “company maker”, he also highlights that Europa’s onshore assets are “transformational” in terms of cash flow.
Here, Wressle is the most advanced growth project in the portfolio.
The development phase recently got underway for Wressle with first oil targeted in the second half of next year, with production expected in the order of 500 barrels of oil day from one of four reservoirs.
Mackay highlights that with a 33% stake in the well, success at Wressle would see current production volumes more than double (Europa ended its financial year, to July 31, producing 141 barrels oil equivalent per day).
“Wressle therefore has the potential to provide us with a cash generative platform from which to grow and prove up our prospect inventory,” he added.
“We have no shortage of exciting prospects in our existing portfolio.”
The Europa boss highlighted further exploration potential between Wressle and the company’s already producing Crosby Warren field.
Meanwhile, in the south of England, in the Weald basin, the company expects to advance the Holmwood prospect to drilling before the end of next year. Mackay highlights that, on current pre-drill estimates (of 5.6mln barrels), the project would be the fifth largest onshore field if it were operating.
“In tandem with advancing our existing licences up the development curve, we are also actively looking to significantly grow our portfolio through our participation in the latest UK onshore licencing round, the results of which are expected in the near term,” he added.
Lastly, Mackay noted the currently challenging oil market.
“While forecasting the future direction of oil prices is a thankless task, we have taken swift action to rebase the company to the lower oil price environment,” he said.
“Already we have reduced our cost base by 20% over the course of the year.
“Thanks to the combination of lower costs and Wressle potentially coming on stream at up to 500 bopd gross in H2 2016, the board is highly confident that Europa’s move up the AIM oil and gas sector rankings remains on track.”