Europa Oil & Gas (Holdings) plc /
Index: AIM / Epic: EOG / Sector: Oil & Gas
24 November 2016
Europa Oil &
Gas (Holdings) plc (‘Europa’ or ‘the Company’)
Sale of Interest
in Wressle Discovery to Upland Resources
Europa Oil & Gas (Holdings) plc, the UK & Ireland focussed oil and gas exploration,
development and production company, is pleased to announce that its
wholly owned subsidiary has signed a Sale and Purchase Agreement
(“SPA”) in relation to a 10% interest in Europa’s PEDL180 and
PEDL182 (‘the Licences’) in North Lincolnshire with Upland
Resources (UK Onshore) Limited (“Upland”). The Licences cover
the Wressle discovery (PEDL180) and the Broughton North prospect
(PEDL182).
· Upland to acquire a 10% working interest in
the Licences from Europa for a consideration of £1.85 million
comprising an initial consideration of £1.6 million and a
contingent consideration of £0.25 million.
· The initial consideration will be met via a
payment of £1.3 million in cash and the issue to Europa of
23,076,923 new ordinary Upland Resources Limited shares (“Upland
Shares”) to the value of £0.3m (at the issue price of 1.3p per
share).
· The contingent consideration is subject to
certain production milestones being met by June 2025 and will be met by the issue of
19,230,769 new ordinary Upland Shares to the value of £0.25m (at
the issue price of 1.3p per share).
· Completion of the SPA is conditional upon
inter alia approval from the Oil & Gas Authority and
approval of the Wressle Field Development Plan
· Wressle is anticipated to commence
production at a gross rate of 500 bopd in early 2017
· Post completion of the transaction, Europa’s
anticipated net 100 bopd from Wressle combined with existing UK
onshore production is expected to increase the Company’s overall
production to around 220 bopd
· At 220 bopd it is expected that Europa will
have a positive cash flow from operating activities at oil prices
above US$30 per barrel.
Europa CEO Hugh Mackay said,
“Europa is delivering on its strategy to actively manage its
portfolio and realise value for shareholders. So far this year we
have farmed out part of our interest in PEDL143 (Holmwood) to Union
Jack Oil; consolidated our position at PEDL299 (Hardstoft) through
deals with Shale Petroleum and Upland; acquired an increased
interest in PEDL346 (Cloughton) from Shale Petroleum; and sold
portions of our interest in PEDL180/182 (Wressle) to Union Jack Oil
and now Upland. The £1.3 million cash consideration from this
transaction together with the £0.6 million cash consideration
received from the previous sale of Wressle to Union Jack will be
used to fund ongoing exploration in the UK and Ireland including drilling the Holmwood well
during 2017, which we rate as one of the best undrilled
conventional prospects onshore UK. Following this transaction we
value our remaining 20% interest in Wressle at £3.7 million.
“Europa holds a portfolio of high quality exploration licences
in both onshore UK and offshore Ireland. We continue to
advance and monetise our multistage portfolio of licences, and in
the process generate value for our shareholders. It is public
knowledge that we are in the process of farming out in Ireland where any one of our seven licences
and licensing options has the potential to be a company maker for
Europa. Whilst we do not provide running commentaries on farmout
activity the market should feel assured that we are talking to the
right parties and seeing strong interest. The recent series of
transactions in the UK demonstrates that we are both active in the
market and capable of closing deals on attractive terms.”
Terms of the SPA
Under the term of the SPA, Upland will acquire a 10% working
interest in the Licences from Europa Oil & Gas Limited, a
wholly owned subsidiary of Europa, for a total initial
consideration of £1.6 million and a contingent consideration of
£0.25 million. The initial consideration will be satisfied
through the immediate payment of £160,000 in cash, a further £1.14
million cash and £0.3 million in new Upland Shares (at a price of
1.3p per new Upland Share) is to be received on completion.
Completion of the SPA is conditional inter alia upon
approval from the Oil & Gas Authority and approval of the
Wressle Field Development Plan.
Contingent on certain production milestones being met by
June 2025, Europa will be issued a
further £0.25 million in new Upland Shares, giving total
consideration of £1.85 million.
Europa can elect to dispose of the Upland Shares following the
later of six months from completion of the transaction and the date
of first export of oil from the Wressle site (subject to a
long-stop date of 1 September 2017).
Europa will retain a 20% interest in the Licences alongside
Egdon Resources UK Limited (25%), Celtique Energie Petroleum
Limited (33.33%), Union Jack Oil plc (11.67%) and Upland Resources
(UK Onshore) Limited (10%).
Europa’s Net Interests
Europa’s post completion share of the Licences’ 2P proved
reserves is 0.13 mmboe, 2C contingent resources is 0.37 mmboe and
net mean un-risked prospective resources is 0.2 mmobe (based on a
Competent Persons Report compiled by ERC Equipoise Limited (‘ERCE’)
on 26 September 2016).
Europa’s net interests following this transaction are tabulated
below:
Table summarising gross volumes at
Wressle and Broughton North along with net volumes attributed to
Europa’s interests before and after transaction
|
|
Gross
Volumes |
|
|
Net
Volumes attributable to Europa before transaction |
|
|
Oil
MMstb |
Gas
Bscf |
Oil and
Gas* MMboe |
Oil
MMstb |
Gas
Bscf |
Oil and
Gas* MMboe |
Wressle
2P Ashover Grit and Wingfield Flags |
0.62 |
0.20 |
0.65 |
0.21 |
0.07 |
0.22 |
2C Penistone
Flags |
1.53 |
2.00 |
1.86 |
0.51 |
0.67 |
0.62 |
Broughton North
Mean Unrisked Prospective Resources |
0.51 |
0.51 |
0.60 |
0.17 |
0.17 |
0.20 |
|
|
Gross
Volumes |
|
|
Net
Volumes attributable to Europa after transaction |
|
|
Oil
MMstb |
Gas
Bscf |
Oil and
Gas* MMboe |
Oil
MMstb |
Gas
Bscf |
Oil and
Gas* MMboe |
Wressle
2P Ashover Grit and Wingfield Flags |
0.62 |
0.20 |
0.65 |
0.124 |
0.04 |
0.13 |
2C Penistone
Flags |
1.53 |
2.00 |
1.86 |
0.301 |
0.40 |
0.37 |
Broughton North
Mean Unrisked Prospective Resources |
0.51 |
0.51 |
0.60 |
0.10 |
0.10 |
0.12 |
*Gas converted to oil equivalent using 6 Bscf/MMboe conversion
and added to oil volume
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014.
* * ENDS * *
For further information please visit www.europaoil.com or
contact:
Hugh Mackay |
Europa |
+ 44 (0) 20 7224 3770 |
Phil Greenhalgh |
Europa |
+ 44 (0) 20 7224 3770 |
Matt Goode |
finnCap Ltd |
+ 44 (0) 20 7220 0500 |
Simon Hicks |
finnCap Ltd |
+ 44 (0) 20 7220 0500 |
Frank Buhagiar |
St Brides Partners Ltd |
+ 44 (0) 20 7236 1177 |
Susie Geliher |
St Brides Partners Ltd |
+ 44 (0) 20 7236 1177 |
Notes
Europa Oil & Gas (Holdings) plc has a diversified portfolio
of multi-stage hydrocarbon assets that includes production,
exploration and development interests, in countries that are
politically stable, have transparent licensing processes, and offer
attractive terms. In 2016 Europa produced 123 boepd.
Its highly prospective exploration projects include the Wressle
development (targeting production start-up in early 2017 at up to
500 bopd gross) in the UK and seven licences offshore Ireland with the potential to host gross mean
un-risked prospective and indicative resources of more than 4
billion barrels oil equivalent and 1.5 tcf gas across all seven
licences.
Qualified Person Review
This release has been reviewed by Hugh
Mackay, Chief Executive of Europa, who is a petroleum
geologist with 30 years' experience in petroleum exploration and a
member of the Petroleum Exploration Society of Great Britain, American Association of
Petroleum Geologists and Fellow of the Geological Society. Mr
Mackay has consented to the inclusion of the technical information
in this release in the form and context in which it appears.
Glossary:
Some of the terms used in this announcement are defined below. A
more exhaustive glossary is contained in ERCE’s letter to Europa’s
Board of Directors summarising the findings of their CPR has been
published on the Company’s website (www.europaoil.com).
Proved Reserves
Proved Reserves are those
quantities of petroleum, which by
analysis of geoscience and engineering
data, can be estimated with
reasonable certainty to be commercially
recoverable, from a given date
forward, from known reservoirs and
under defined economic conditions,
operating methods, and government regulations.
If deterministic methods are used, the term reasonable certainty
is intended to express a high degree of confidence that the
quantities will be recovered. If probabilistic methods are
used, there should be at least a 90% probability that the
quantities actually recovered will equal or exceed the estimate.
The area of the reservoir considered as Proved includes:
· the area delineated
by drilling and defined by
fluid contacts, if any, and
· adjacent undrilled
portions of the reservoir that
can reasonably be judged as
continuous with it and commercially
productive on the basis of
available geoscience and engineering data
In the absence of data on fluid contacts, Proved quantities in a
reservoir are limited by the lowest known hydrocarbon
(LKH) as seen in a well
penetration unless otherwise indicated
by definitive geoscience, engineering, or
performance data. Such definitive information may
include pressure gradient analysis and
seismic indicators. Seismic data
alone may not be sufficient to
define fluid contacts for Proved
Reserves (see “2001 Supplemental
Guidelines,” Chapter 8). Reserves in
undeveloped locations may be classified as Proved
provided that the locations are in undrilled areas of the reservoir
that can be judged with reasonable certainty to be commercially
productive and interpretations of available geoscience and
engineering data indicate with
reasonable certainty that the
objective formation is laterally continuous
with drilled Proved locations. For Proved
Reserves, the recovery efficiency
applied to these reservoirs should
be defined based on a range of
possibilities supported by analogues
and sound engineering judgment
considering the characteristics of the Proved area and the
applied development programme.
2P
Proved + Probable, a best estimate category of Reserves.
Contingent Resources
Contingent Resources are those
quantities of petroleum estimated, as
of a given date, to be
potentially recoverable from known
accumulations by application of
development projects, but which are
not currently considered to be commercially recoverable due to one
or more contingencies.
Contingent Resources may include,
for example, projects for which there
are currently no viable markets, or
where commercial recovery is
dependent on technology under
development, or where evaluation of
the accumulation is insufficient to
clearly assess commerciality. Contingent
Resources are further categorized in
accordance with the level of
certainty associated with the
estimates and may be sub?classified based on
project maturity and/or characterized by their economic status.
2C
A best estimate category of Contingent Resources.
Prospective Resources
Prospective Resources are those
quantities of petroleum which
are estimated, as of a given
date, to be potentially recoverable from undiscovered
accumulations. Potential accumulations are evaluated according to
their chance of discovery and, assuming a discovery, the
estimated quantities that would be
recoverable under defined development
projects. It is recognized that the
development programs will be of
significantly less detail and depend
more heavily on analog developments in the earlier phases of
exploration.