Europa Oil’s (LON:EOG) acreage in Ireland’s Atlantic Margin has the potential to host a major field early stage technical work has indicated.
Europa announced it had discovered two potentially large discoveries in the Atlantic waters offshore Ireland in September and now called Mullen and Kiernan.
At Mullen, a first pass seismic reprocessing resulted in an indicative resources estimate of between 66 mln barrels (P90) and 1.1 bln (P10) with a P50 (or 50% chance of success) estimate of 318 mln barrels and supported by an amplitude shut-off at a constant depth.
Mullen is located approximately 1,000 m of water and is therefore feasible for a fixed platform development.
Reprocessing of seismic data for Kiernan, the larger of the two structures with stratigraphic closures of up to 244sq km, is still on-going.
Hugh Mackay, Europa’s chief executive, said: "We believe the South Porcupine Basin has the potential to host a new hydrocarbon province."
“Since our identification of these two large, previously unknown prospects, significant progress has been made towards uncovering the potential of these large structures.
“Whilst reprocessing of seismic for Kiernan, the larger of the two structures with stratigraphic closures of up to 244sq km, is still on-going, the technical case of Mullen has been further matured and will be presented at the Atlantic Ireland 2012 Conference in Dublin on 12 November 2012.
“Additionally the prospectivity of the South Porcupine basin will be further tested by the upcoming ExxonMobil Dunquin well, which is expected to be drilled in Q1 2013.
“In order to maximise the potential of these prospects we remain in search of a joint venture partner with whom to further de-risk Mullen and Kiernan and mature them to a drillable status."
Broker Northland said that though still early stage, this is further good progress demonstrating the prospectivity of the Irish Atlantic Margin assets.
It added that as Europa is seeking to farm out further the work necessary take these to drillable status (which may include US$10-20m of 3D seismic acquisition) and given significant capex required, size will be a key determinant of the attractiveness of these assets to majors or significant independents. Northland also upgraded its share rating to 'add'.
FinnCap added that the initial valuation work supports the view that the prospect is a material opportunity for Europa, although further work and funding is required to de-risk it to a drillable status.
“Securing a joint venture partner is therefore a key next step and an important catalyst for the shares,” the broker said.