Europa Oil & Gas is to acquire a stake in the North Sea block 13/23c (Serenity), to add what it says is an appraisal asset to its portfolio.
Serenity is expected to be drilled during 2022 at a gross cost of £14mln.
Europa will acquire a 25% interest in the block by paying for 46.25% of the cost of this well equating to a 1.85 to 1 carry.
The carry is capped at a gross well cost of £15 mln, of which Europa’s interest will be £6.94mln, after which costs will be shared proportionately with current owner I3 Energy.
Serenity is strategically located near existing infrastructure in the North Sea, Europa said, but the appraisal well could provide sufficient recoverable volumes for a standalone development.
Funding for the farm-in will come from an offer for subscription through PrimaryBid that has raised £7.02mln gross with new shares issued at a price of 1.8p or a 22% discount to the average for the past 30 days.
“This acquisition is in line with the company's previously stated intention to acquire an appraisal asset to add to its existing producing assets and high impact exploration assets - thus providing investors with a more balanced asset portfolio,” Europa said in a statement.
Simon Oddie, Europa’s chief executive, subscribed for 2.5mln shares in the subscription, Brian O’Cathain, chairman, 634,00 and non-exec William Ahlefeldt-Laurvig 833,000, at a total cost for all three of £75,000.
The placing and farm-in comes just days after Europa's plan to acquire Frontier Exploration Licence (FEL) 3/19 near the Corrib gas field, offshore Ireland, fell through as vendor DNO exercised its right to terminate the June 2020 agreement.