It will mean that UKOG, in aggregate, has consolidated its stake in Holmwood to up to 67.5%. As a result, the company has secured control of the project, which neighbours its flagship Horse Hill discovery, now on the road to development and permanent production.
For Europa and Union Jack, it sees the companies exit a project that had stalled in the planning permission process and, consequently, remains uncertain.
“The sale of our remaining interest in PEDL143 demonstrates how we actively manage our portfolio of licences on a risk / reward basis,” said Hugh Mackay, Europa chief executive.
He added: “We continue to look to maximise production from our UK onshore assets including our three producing fields and the Wressle discovery in the East Midlands.
“Finally, we are closing in on adding a new exploration project to our portfolio, a high impact, new venture in Morocco which, in terms of size and company-making potential, is on a similar scale to our Irish licences.”
Irish farm out deal pending
Offshore Ireland, the company is awaiting confirmation of an important decision from a potential new partner, which would pay for high impact exploration wells.
It revealed in a statement earlier this month that it is in talks with a major international oil company over a potential farm-out - of interests in the LO 16/20 (which hosts the Inishkea gas prospects), FEL 1/17 (includes the Edgeworth prospect) and FEL 3/13 (Beckett, Shaw and Wilde) exploration areas.
Europa described itself as confident that a deal can be concluded in the coming months. It is anticipated that such a deal would see Europa’s costs fully carried on a well for each area, and the company would retain a “material” interest in the assets too.
The company now awaits a decision to be made at the potential partner’s head office.
Today, Mackay highlighted that the Holmwood funds would be directed towards Ireland.
“We will deploy corporate resources and capital elsewhere in our portfolio, mainly in monetising our industry-leading licence position offshore Ireland,” he noted.
“Here gross prospective resources of up to 6.4 billion barrels of oil and 1.5 tcf of gas at our flagship Inishkea project have been identified, while farm-in negotiations are ongoing with a major international oil and gas company with a view to drilling up to three high impact wells from 2020 onwards.”
Chinese drilling offshore Ireland
In the coming months, third-party drilling activity could provide value-adding catalysts for Europa and other Irish explorers. Specifically, China’s CNOOC is due to drill a well to test the Iolar prospect.
Exploration success in the South Porcupine basin would be significant for all companies with interests in Ireland’s Atlantic frontier, while for Europa it would especially benefit the Kiely East (estimated at 280mln barrels) and the Edgeworth (225mln barrel) targets.
Such prospects would be “significantly de-risked” by success at Iolar, Europa chief executive Hugh Mackay highlighted in Friday’s interim results statement. Both Kiely East and the Edgeworth are rated as ‘drill-ready’ prospects and are part of Europa’s package of explorations assets that are available to farm-out partners.
Internally, meanwhile, the Inishkea gas prospects are now deemed to be the priority. These exploration targets are located in the vicinity of the Corrib field, Ireland’s largest field and the country’s primary source of gas.
The Inishkea portfolio will be the subject of site survey, along with Kiely East and Edgeworth, this summer. This work will be a precursor to future drilling decisions.