It follows an exploration programme which concluded that the prospectivity of the area is limited, the company said.
The company had been partnered with Cairn Energy PLC (LON:CNE) in the exploration project, with the partner owning 70% of the asset and, as a result, Europa spent £94,000 of carrying costs. This will be written off in the current period.
Europa expects that by relinquishing LO 16/19 it will avoid £105,000 of future costs.
“Today’s relinquishment of LO 16/19 provides a worked example of how our low cost/low-risk exploration model works in practice: acquire acreage at an early stage; identify and work up the technical case of leads; attract partners to fund further de-risking of prospectivity; and, based on the results, elect to drill or drop,” said Simon Oddie, Europa's interim chief executive in a statement.
“In LO 16/19’s case, the decision has been taken by both partners to relinquish the acreage. As this demonstrates, our exploration model is centred on potentially exposing Europa to high reward wells while at the same time minimising cost and risk,” he added:
“This is what we are looking to achieve at our flagship 1.5 tcf Inishkea prospect in the Slyne Basin. Farming out Inishkea and our other FELs 1/17 and 3/13 is just one workstream being advanced not just in Ireland but across our asset base in onshore UK and offshore Morocco.”
The Europa boss noted that the recent planning approval breakthrough for the Wressle project, onshore UK, will double the company’s net production later this year, to over 200 barrels of oil per day.
He also added that “offshore Morocco a programme is underway to de-risk targets already identified on our recently acquired acreage."
“We are also seeking to add a third area to our portfolio in the appraisal/development part of the business,” Oddie concluded.
Broker finnCap described the relinquished area as “peripheral” and said that it showed limited prospectivity and had only a slim chance of attracting partners.
“This active portfolio management will preserve cash and allow management to focus on pursuing partners for its remaining Irish and Moroccan licences,” finnCap analyst Jonathan Wright said in a note.
“Top of the list is the Inishkea gas prospect on FEL 4/19 in the Slyne basin. This prospect is large, low-risk, gas not oil, and adjacent to the producing Corrib gas field infrastructure.”
“Our risked-NAV and price target did not ascribe any value to these licences and therefore remains unchanged at 14p per share.”