It was a lively week in the oil and gas sector with shares in Europa Oil & Gas (LON:EOG) surging at the end of the week after it struck a farm-out deal with Kosmos Energy for its two assets in the South Porcupine basin, off the coast of Ireland.
Kosmos is acquiring an 85% stake in two licensing options in the South Porcupine basin, off Ireland’s West coast.
On Friday, the firm's chief executive Hugh Mackay said the group’s Irish exploration assets couldn’t be in better hands following the deal with Kosmos.
As part of the deal it is fully covering the cost of a 3D seismic programme on each of the two licences, and it will also pay a proportionate amount of Europa’s back costs.
It also agrees to cover a maximum of US$200mln of drilling costs on two explorations wells, one on each licence.
In a separate deal with another AIM-quoted firm last week, Antrim Energy (LON:AEY), Kosmos also acquired a 75% interest in a third licence block in the area. It will also pay for 3D seismic as well as back costs in this deal too.
Subsequently, Antrim will retain a 25% in the project.
There was reserves upgrade news from US focused Magnolia Petroleum (LON:MAGP), which revealed a five-fold increase in the value of its oil reserves.
A new competent person's report (CPR), prepared by Moyes & Co, estimates the group’s 3P – Proven, Probable and Possible - oil reserves at 2.8mln barrels of oil and condensate and 9.2mln cubic feet of gas.
As a comparison, when it listed on AIM in November 2011, Magnolia had reserves which were worth US18mln.
Speaking of CPRs, New World Oil & Gas (LON:NEW) said yesterday it was expecting a a new one for its Danish exploration assets by the end of the second quarter.
The AIM quoted explorer told investors it had now completed the interpretation of data from a recent 3D seismic programme on the Jensen prospect within the Danica Jutland project.
Talks are currently underway with potential farm-in partners.
For New World, the new CPR is likely to be a boost to these discussions. The Jensen prospect is presently estimated to contain 48mln barrels of oil.
Meanwhile, New World also told investors it had completed a 2D seismic programme on the Danica Resources project area, and it is now interpreting the data so that it can decide which leads to follow up with 3D seismic.
Elsewhere, VSA Capital this week started coverage of the Anglo-Turkish oil explorer and producer Genel Energy (LON:GENL) with a ‘buy’ recommendation and £12 a share price target, based on the firm's producing and near-term development assets.
Analyst Dougie Youngson reckons Genel’s exploration assets, along with its gas projects, have the potential to add a further 917 pence to that already-bullish number.
VSA looked at potential share price catalysts, including the impact of Genel being able within the next year to export its hydrocarbons from its Kurdistan projects into neighbouring and energy-hungry Turkey.
This, it concluded, will “significantly increase revenue and cash flow".
Elsewhere, Petroceltic International (LON:PCI) has added new Egyptian projects to its portfolio via the country’s latest licence bidding round.
It has won two licence blocks with a joint bid with Edison International.
The first, the North Thekah block is located offshore of the Nile Delta and Petroceltic say it is believed to host an extension of the Levantine basin exploration play which has already yielded significant discoveries elsewhere.
Petroceltic will have a 50% interest in North Thekah and its initial work commitments is for a 3D seismic programme spanning 1,500 sq km.
Elsewhere in the sector, Oilex (LON:OEX) has expanded its exploration footprint by adding new prospects in the Canning basin, Western Australia.
It says the project, which spans 11,400 square kilometres, represents a low-cost and low-risk opportunity to enter one of Australia’s premier unconventional basins.
The plan is to carry out a six month ‘low level’ work programme in the third quarter to assess the area’s prospectivity for hydrocarbons.