Angus Energy Plc (LON:ANGS) has teamed up with UK fracker Cuadrilla for the controversial Balcombe oil field in southern England.
The AIM-quoted company has agreed to acquire a 25% stake in Balcombe, where a new well testing programme is planned “at the earliest opportunity”.
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It is paying £2mln upfront, plus a further £2mln upon approval of the transaction by the UK Oil & Gas Authority, and the company will also pay for the test of the horizontal Balcombe-2Z well.
Angu said in a stock market statement that the planned operations will be classed as ‘conventional production’ and added there’ll be no fracking at the Balcombe site.
Paul Vonk, Angus Paul Vonk, said Balcome-2Z would add to the company’s knowledge base and understanding of the Kimmeridge play - which is being tested by a number of wells including the Horse Hill project and Broadford Bridge well.
“This transaction complements our existing asset base and aligns with our goal of enhancing shareholder value,” Vonk said.
“This joint venture is an important milestone as we execute our business plan. Both the new partnership and Cuadrilla's and Lucas' recognition of Angus Energy's ability to manage and execute operations in a safe and efficient manner at Balcombe are gratifying to our entire team.”
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Meanwhile, Cuadrilla chief executive Francis Egan said: “Following the approval of our planning application to flow test and monitor the existing horizontal exploration well at Lower Stumble we are delighted to form this new partnership with Angus Energy, an existing and successful operator in the area.
“This agreement will enable the testing works to be undertaken in a timely way and to the highest standards, whilst we continue to also focus on our shale gas operations in the North West."
Back in 2013, the Balcombe project was at the centre of high profile anti-fracking protests.
Cuadrilla drilled a well down to 2,700 feet and out to 1,714 feet horizontally, and due to the discovery of naturally fractured limestone target rocks the company decided that fracking would not be necessary.
The project, which is part of the Weald basin, was subsequently put on the back-burner whilst Cuadrilla has advanced its shale gas interests in North West England.
In the meantime, a number of exploration and appraisal projects by other companies have addressed the oil potential within naturally fractured zones with notable success – for example, at the Horse Hill site a well flowed close to 2,000 bopd from several intervals including those in a similar naturally fractured limestone play.
Indeed, it is these kinds of projects that Angus (an investor in Horse Hill at one point) has been targeting. It already has stakes in the Lidsey and Brockham oil fields, where Kimmeridge zones are present, and has a deal to take a stake in the Holmwood project which directly neighbours Horse Hill.