Cairn Energy PLC (LON:CNE) has taken the plunge offshore Ireland with two separate farm-out deals, one with Providence Resources PLC (LON:EOG) and one with Europa Oil & Gas Plc (LON:EOG).
It is taking a 30% stake in Providence’s FEL 2/14 which contains the Druid exploration project, where drilling is planned this year – Cairn will now cover 45% of the well costs, up to US$42mln.
Druid, a 3.1bn barrels exploration target, is due to be drilled in June by Stena International’s IceMAX drill-ship. There is the option for a second well, and Cairn will pay 40% of that well’s cost (also up to US$42mln) if it goes ahead – at that point it will also earn the right to take over operatorship of the project.
Cairn and Providence are already partners offshore Ireland, in the Spanish Point appraisal project where the next programme will likely follow a further partnering process.
Meanwhile, it will take 70% of Europa’s Licensing Option 16/19 by covering the costs of a US$6mln work programme, including 3D seismic.
LO 16/19 lies adjacent to Europa’s more advanced FEL 2/13 where the AIM quoted group’s prior 3D seismic programme identified some 1.5bn barrels of oil potential across three targets, and it is believed that the farm-out area contains similar features.
Europa at the same time continues to seek further farm-out deals for its other Irish assets (it has seven offshore licences comprising 20 prospects, estimated in excess of 4bn barrels of oil and 1.5 trillion cubic feet of gas).