TIDMEOG
Europa Oil & Gas (Holdings) PLC
14 December 2017
Europa Oil & Gas plc / Index: AIM / Epic: EOG / Sector: Oil
& Gas
14 December 2017
Europa Oil & Gas (Holdings) plc ('Europa' or 'the
Company')
Shareholder Newsletter
Europa Oil & Gas (Holdings) PLC is pleased to provide its
investors with the following update on its portfolio of multistage
licences offshore Ireland and onshore UK. This update is consistent
with the content of today's AGM slidepack and available on Europa's
website www.europaoil.com:
Dear Investor,
In 2016 Europa had one of its most successful years ever for new
ventures. This included being the most successful company in
Ireland's Atlantic Margin licensing round landing five new licences
and against stiff competition from the majors including Exxon,
Statoil, Nexen, Woodside and Cairn. Work doesn't end with licence
award. This is when the substantive technical work begins. Europa
has a strong technical team and substantial progress has been made
across all our Irish licences. Work is focussed on building the
prospect portfolio and investing technical work to de-risk the
prospects with the intent of generating six drillable prospects by
the end of 2018.
Yesterday we advised investors that new work on Licensing Option
(LO) 16/20 in the Slyne basin next to the Corrib gas field has
identified the proven presence of gas. There is a perception
amongst some commentators that every basin and prospect in Atlantic
Ireland is deep water, high risk frontier exploration. Whilst this
is true of some prospects most of our prospects in the Slyne basin
are in relatively shallow water (400-600m) and represent lower risk
exploration and appraisal close to a producing gas field. In 2010
Shell drilled the 18/20-7 exploration well onto the Corrib North
structure in what is now LO 16/20. This well data was recently
released into the public domain and having studied the data in
detail we believe that the well results are considerably better
than the well status of plugged and abandoned with gas shows might
suggest. The well penetrated a 70m gas column in the same Triassic
sandstone reservoir as the Corrib field and in a separate structure
called Corrib North some 7 km from Corrib. The well was terminated
in the reservoir meaning the gas column is a gas down to and based
on our mapping we believe that the full gas column may be some 170m
and the surface area of the structure is some 5.75km2. The presence
of gas reservoir substantially de-risks the Corrib North prospect
as well as de-risking other prospects in the licence. We updated
investors with estimates of gas in place on 13 December. We are
currently working with a subsurface and production engineering
consultancy and in H1 2018 we intend to update investors with
prospective resources across the entire prospect inventory and may
even have contingent resources for Corrib North. We have confirmed
the presence of the previously identified Foyle prospect. It
comprises three segments Foyle, Foyle North and Foyle West some 16
km northwest of Corrib and we believe that it may contain over 2TCF
of gas in place. Its burial history suggests the reservoir
porosities may be as good as if not better than the Corrib field.
Once the prospect inventory is completed the next step will be to
reprocess the legacy 3D that Europa has obtained over the licence
and mature prospects to drillable prospect status and farmout.
During the year we mapped three new prospects in LO 16/2 in the
South Porcupine basin: Edgeworth, Ervine and PR3. These are
pre-rift prospects comprising Middle Jurassic sandstone reservoir
in tilted fault block structures adjacent to Late Jurassic source
rocks in the oil window. A CPR by ERC equipoise in May 2017
identified a combined 553 million barrels of oil equivalent of
gross mean unrisked prospective resources (GMUPR) in Edgeworth and
Ervine. When combined with the Beckett, Wilde and Shaw prospects in
the adjacent FEL 3/13 we have an audited GMUPR of 2 billion boe
across two licences. A third prospect in LO 16/2, PR3 was not
included in the CPR due to issues with 3D seismic data quality.
Europa's inhouse estimate of GMUPR for the PR3 prospect is 345
mmboe. We were sufficiently encouraged to apply to convert LO 16/2
into FEL 1/17 and this became approved from July 2017. The 3D
seismic survey shot in 2013 by Kosmos on behalf of the joint
venture was not optimised for the pre-rift prospectivity. In an
effort to further de-risk and mature the three prospects in what is
now FEL 1/17 to drillable prospect status we have reprocessed the
entire 1548km2 2013 3D seismic survey that covers both FEL 1/17 and
FEL 3/13. The reprocessing was completed in October 2017 and the
results have dramatically improved the character, continuity and
position of pre-rift fault blocks. The reprocessing has also
provided new insights for the Cretaceous fan prospects in FEL 3/13
including the best evidence yet of hydrocarbons including updip
pinchout, a gas oil contact and conformance to structure.
Interpretation is in progress over both licences and we will update
the investors in 2018 with a revised prospect inventory.
In March 2017 Europa announced the farmout of a 70% interest in
LO 16/19 in the South Porcupine basin to Cairn Energy leaving
Europa with a carried 30% interest in a $6 million work programme.
This enabled us to participate in TGS's CREAN multiclient 3D survey
acquired during July to October 2017 and including 942 km2 over LO
16/19. Fast track data will become available in Q1 2018 and final
processed data will become available Q3 2018 at which point we will
undertake detailed prospect mapping and build a prospect inventory.
We are pleased to have secured a partner of the calibre of Cairn
and to have moved so quickly to acquire 3D. We believe there are
Cretaceous fan prospects developed in LO 16/19 and 3D seismic is
the vital first step necessary to develop a meaningful prospect
inventory.
FEL 2/13 is adjacent to LO 16/19 and we released an updated
prospect inventory in April 2017 comprising some 10 prospects with
a combined GMUPR of 1.1 billion boe. Three new prospects in
particular: Kiely, Keane and Kilroy in the pre-rift, syn-rift and
Cretaceous slope apron plays respectively each have the potential
to exceed the GMUPR of 200 mmboe which we regard as a minimum
economic field size. The proprietary 948 km2 3D survey acquired by
Kosmos on behalf of the JV was again not optimised for the pre-rift
and syn-rift and we have therefore commenced a reprocessing project
with the intent of de-risking the prospects and maturing to
drillable prospect status. This work will be completed in H1 2018.
We have also entered a commercial arrangement with TGS to include
FEL 2/13 in the CREAN multi-client survey which is available for
purchase by 3rd Parties. The data room for the FEL 2/13 farmout
will open in Q2 2018.
Regarding our farmout activity more generally in Atlantic
Ireland while there are good grounds for encouragement that more
farmouts will be delivered we regard it as imprudent to provide any
further commentary at this stage.
And finally, in Ireland Europa has conducted new geochemical
evaluations of oil extracted from drop cores in LO 16/22 in the
Padraig basin and has identified bisnorhopane biomarkers that
indicate the presence of oil mature Jurassic (Kimmeridgian) source
rocks. Aside from indicating the presence of a working source rock
this new information is significant for two reasons 1) it provides
evidence that Jurassic syn-rift stratigraphy is present on the
licence and endorsing the potential for a Flemish Pass style
syn-rift play and 2) it suggests that the Padraig petroleum system
shares the same source rocks as the Dooish oil discovery in the
Rockall basin and the West of Shetland oil fields (e.g.
Schiehalion, Clare and Lancaster) rather than the Porcupine basin
source rock.
We had two major activities planned for onshore UK in 2017:
bringing the Wressle oil discovery onto production and drilling the
Holmwood oil exploration well. Both have taken more time than
anticipated to progress through the planning regime.
The Wressle oil development planning application was recommended
for approval on two occasions by North Lincolnshire planning
officers and on each occasion, was refused by the planning
committee. The decision was appealed, and a Planning Inquiry was
held in November 2017. The planning inspector's judgment is
anticipated to be issued on or before 10 January 2017. A successful
outcome will not only allow the joint venture to proceed and put
the field into production at a forecast 500 bopd gross (100 bopd
net to Europa). It will also enable us to complete the GBP1.85
million sale of a 10% interest to Upland Resources (initial and
deferred consideration).
Europa produces from its 100% operated fields at West Firsby and
Crosby Warren and receives production from the Whisby-4 well. In FY
2017 Europa produced 113 boepd resulting in revenue of GBP1.6
million. Our guidance for production in FY 2018 is 100 boepd.
Production is temporarily reduced to 94 boepd as we programme a
workover on the WF6 production well, better than expected oil
prices means that revenue forecasts remain unchanged. Wressle
production can potentially provide an additional 100 bopd
production net to Europa during 2018.
The Holmwood exploration well in PEDL 143 has planning
permission and 22 of 23 planning conditions have been discharged. A
decision for the remaining Condition 19 (Construction Transport
Management Plan) was recommended for approval by Surrey County
Council planning officers and the decision has been deferred twice
by the planning committee. We have therefore submitted an appeal to
the Planning Inspectorate as well as resubmitting the CTMP to
Surrey County Council. Subject to satisfactory discharge of the
remaining condition the well will be drilled in 2018.
In March 2017 we announced the farmout of a 12.5% interest in
PEDL 143 to Angus leaving Europa with a 20% interest. This farmout
together with a 2016 farmout to Union Jack means we are carried on
the well cost up to a cap of GBP3.2 million.
We anticipate that 3D seismic acquisition over the Cloughton gas
discovery may commence later in 2018 and that 2D seismic
acquisition over the Hardstoft oil field will commence in 2019. In
both cases a successful outcome to subsequent interpretation would
result in drilling a low risk appraisal well on a known gas
discovery and oil field respectively.
Looking to the year ahead we anticipate receipt of the Wressle
planning inquiry judgment on or before 10 January. During H1 2018
we anticipate discharge of the remaining Holmwood planning
condition and operations startup. In Ireland there will be
substantial technical work on the prospect generation on new 3D
seismic in LO 16/19 and newly reprocessed 3D seismic over FEL 1/17,
FEL 2/13 and FEL 3/13 together with completion of the prospect
inventory over LO 16/20 with legacy 3D. In parallel with this
activity we will be working farmouts hard and are confident we can
add to the two farmouts landed in 2017.
We are evaluating several new venture opportunities and will
continue to do so on an ongoing basis throughout the upcoming year.
These opportunities are at various stages in the asset lifecycle.
Three of the opportunities are in what would be new jurisdictions
for Europa were they to be landed, but remain within the Atlantic
seaboard, Northwest Europe, Mediterranean and North Africa area of
interest.
* * ENDS * *
For further information please visit www.europaoil.com or
contact:
+ 44 (0) 20 7224
Hugh Mackay Europa 3770
+ 44 (0) 20 7224
Phil Greenhalgh Europa 3770
+ 44 (0) 20 7220
Matt Goode finnCap Ltd 0500
+ 44 (0) 20 7220
Simon Hicks finnCap Ltd 0500
+ 44 (0) 20 7220
Emily Morris finnCap Ltd 0500
+ 44 (0) 20 7236
Frank Buhagiar St Brides Partners Ltd 1177
+ 44 (0) 20 7236
Susie Geliher St Brides Partners Ltd 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 2017 Europa produced 113 boepd. Its highly
prospective exploration projects include the Wressle development
(targeting production start-up in 2018 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
4.7 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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