Europa Oil & Gas Holdings Plc (LON:EOG) is sufficiently encouraged by its progress offshore Ireland that is now actively preparing for a well programme, which could come as soon as next year.
The Ireland focussed explorer, in its final results statement, highlighted the potential within its catalogue of high impact offshore prospects in the Atlantic Margin, off the west coast – with the spotlight on the gas targets in the Inishkea area.
Some 2.54 trillion cubic feet of gas potential has been estimated across six prospects in the Inishkea area which is in the neighbourhood of the Corrib field, Ireland’s primary source of gas.
These prospects are somewhat de-risked by a past well, drilled in 2010 by Shell, which encountered an 80-metre gas column which Europa believes was only a portion of the reservoir.
The fact that Corrib is next door, naturally, creates an opportunity for new gas discoveries to be delivered to market faster than they might otherwise be.
For Europa, the plan is now to secure an exploration partner through a farm-out process which is presently underway.
Inishkea was identified as a priority area by Europa, but, it is just one of a number of project areas for which funding partners are sought via farm-out. The process is expected to get underway officially for Inishkea before the end of this year, once an updated prospect inventory has been completed in December.
In all, the company has some 4.3bn barrels of prospective resources and several ‘drill-ready’ targets and numerous interested parties are engaged in the process.
“Our farmout process commenced in July 2018 and the target market of supermajors, majors and large independents are in the virtual and physical data rooms,” said Hugh Mackay, Europa Oil & Gas chief executive.
“We are looking to drill as early as 2019, subject to industry or financial partnering and we have been sufficiently encouraged by the positive results to commence both the well planning and site survey preparation necessary for a 2019 spud.
“With the Corrib gas field going into decline and Ireland’s demand for both gas and electricity forecast to increase in response to its vibrant economy we believe there is a window of opportunity for gas that we must seize at Inishkea.”
In terms of financials, the exploration company reported £1.6mln of revenues from its small-scale production operation in the United Kingdom, and, had a £1.3mln write off against exploration assets.
It made a pre-tax loss of £2.3mln for the year, which post-tax amounted to £2.6mln.
Europa ended the twelve month period, with £1.8mln of net cash at the end of July.
United Kingdom operations
Production averaged 94 barrels oil equivalent per day from the company’s interests in the East Midlands. Europa ranked as the third largest UK onshore UK oil producer during the year.
Efforts to substantially increase output was frustrated in the councils and courts, as the pre-development Wressle project was stymied by the opposition. Two past planning applications failed to secure approval for the new oil field, though a new application was made and a verdict is anticipated later in 2018.
The Holmwood exploration venture, in the neighbourhood of the Horse Hill discovery, also ran into planning obstacles. A lease for a potential well site was denied renewal, leading to the subsequent withdrawal of a planning application.
Mackay added: “our existing UK onshore production continues to generate meaningful revenues which at current oil prices more than cover our operational expenses.
“We are hopeful these are set for a major boost in the year ahead should the planning application to develop the Wressle oil discovery in the East Midlands be approved.
“At an estimated gross rate of 500bopd, Wressle would more than double our net output to around 240 bopd which, at today’s oil prices, would provide us with a highly cash generative platform with which to invest in other projects. This could include new ventures which we are actively pursuing.”