EUROPA OIL & GAS (HOLDINGS) PLC Europa Oil & Gas plc / Index: AIM / Epic: EOG / Sector: Oil & Gas 14 March 2016
Europa Oil & Gas (Holdings) plc ('Europa' or 'the Company') Shareholder NewsletterEuropa Oil & Gas (Holdings) PLC is pleased to provide its investors with the following update on its portfolio of multistage licences onshore and offshore UK, offshore Ireland, and onshore France covering the period from the AGM on 9 December 2015 to date. This period has seen significant news emerge from both Ireland and the UK, specifically regarding the award of the following new licences:
Awarded strategically important Licensing Option ('LO 16/2') in the southern Porcupine Basin, offshore Ireland, as part of Phase 1 of the 2015 Atlantic Ireland round - based on its proprietary 3D seismic, Europa believes LO 16/2 contains three prospects with gross mean un-risked prospective resources of 895 million barrels of oil equivalent ('boe')
The new Licensing Option is adjacent to Europa's existing prospects in FEL 3/13 in the south Porcupine Basin, where 1.5 billion boe of gross mean un- risked prospective resources have already been identified
Including LO 16/2, Europa now has a 100% interest in an estimated three billion boe of gross mean un-risked prospective resources across its three licences in the south Porcupine Basin
A number of major international oil companies have also been offered awards of Licensing Options in Phase 1 of the 2015 Atlantic Margin Licensing Round and the level of interest shown in the acreage endorses the prospectivity of the basin
A second phase of awards is due to be announced in May 2016 and Europa eagerly awaits news on its remaining applications
Three new onshore licences awarded in the 14th UK Onshore licensing round, which Europa believes have a number of exciting leads and prospects
In addition, Europa has seen further progress on two of the Company's onshore UK licences:
Planning for development of the Wressle field, which has already seen production in excess of 700 boepd from the exploration well
Well planning for an exploration well on Holmwood in the Weald basin, which has gross mean un-risked prospective resources in excess of 5 million boe
Europa CEO Hugh Mackay said, "With the award of a new strategically important licence in Ireland, which saw us beat off competition from major international oil companies, together with our three new licences onshore UK, all of which have great potential, this is a tremendously exciting period for Europa. In addition, we continue to move our existing UK
acreage forward through ongoing work on the development of the Wressle discovery which has the potential to double our existing production in H2 2016, and also the preparation for an exploration well at Holmwood, following our recent successful planning appeal. Holmwood is located adjacent to PEDL 137 which has recently demonstrated hydrocarbon flows from the Horse Hill-1 exploration well. A Horse Hill partner, UK Oil and Gas Investments, has joined the Holmwood licence following its farm-in agreements with Egdon and Warwick, our other two partners at Holmwood.
"We are continuing with our own farm-out activities, seeking partners in Ireland, at Holmwood and Bearn-des-Gaves in France. Whilst the current oil price provides challenges to all those active in the sector, the reductions seen in service sector costs will flow through to lower exploration and development costs which can only be of benefit as we seek partners to work with us as we continue maturing our portfolio."
Our work in Ireland is focussed on two areas:
Farm-out of Frontier Exploration Licence (FEL) 2/13, FEL 3/13 and Licensing Option (LO) 16/2
New licence applications in the 2015 Atlantic Margin Licensing Round
On 22 February 2016 it was announced that Europa had been awarded a 100% interest in LO 16/2. LO 16/2 comprises some 522km2 of ground and adjoins the eastern boundary of FEL 3/13. Europa has identified three new pre-rift prospects in LO 16/2 with combined gross mean un-risked prospective resources of 895 million boe. The new prospects were mapped on Europa's proprietary 3D seismic that was acquired in 2013. Europa has a 100% interest in FEL 3/13 and on 12 May 2015 issued a summary Competent Persons Report ('CPR') by ERC Equipoise confirming gross mean un-risked prospective resources of some 1.5 billion
boe across three Cretaceous prospects on the licence with a potential mean Un-risked NPV10 of approximately US$7 billion and a mean Risked NPV10 of US$1.1 billion. Europa therefore has a 100% interest in almost 2.4 billion boe gross mean un-risked prospective resources in the combined six prospects in FEL 3/13 and LO 16/2. The next steps on LO 16/2 will be to invest further technical work to mature the prospects to drillable status and deliver a CPR later in 2016.
There is clear technical and commercial synergy between LO 16/2 and FEL 3/13, and as a result LO 16/2 can now be included as part of the ongoing farmout of FELs 2/13 and 3/13. The combined audited and unaudited gross mean un-risked prospective resources across FELs 2/13 and 3/13 and LO 16/2 are almost 3 billion boe (see table below). For the avoidance of doubt prospective resources are by definition recoverable.
Licence | Gross mean Un-risked prospective resources MMboe | Comment |
FEL 3/13 | 1,492 | ERC Equipoise CPR |
LO 16/2 | 895 | Europa in-house |
FEL 2/13 | 595 | Europa in-house |
Total | 2,982 |
Licence awards in the 2015 Atlantic Ireland round will be conducted in two phases. The first phase announced on 11 February 2016 was designed to accommodate applications in areas where firm seismic acquisition programmes form part of Licensing Option work programmes with some surveys planned to be acquired in summer 2016. Whilst Europa has been awarded a Licensing Option in the Phase 1 awards, the Company has not offered firm seismic as part of its work programme since it already has 3D seismic over LO 16/2. Investors may recall that this seismic was acquired and processed under the terms of Europa's carried work programme with Kosmos Energy. Phase 2 awards will be made in May 2016. Europa has made other applications that will be considered by the Irish authorities and management looks forward to the award outcome with great interest.
The open acreage around FEL 2/13 has been bid for and will be awarded in Phase 2. The open acreage to the north of FEL 3/13 has been bid for and will be awarded in Phase 2. The area to the south of FEL 3/13 has been awarded to Woodside Energy as part of Phase 1. A licence map can be found on the DCENR website:
http://www.dcenr.gov.ie/natural-resources/SiteCollectionDocuments/Oil-and-Gas- Exploration-and-Production/Concession_Map_A3_Feb2016_LR.pdf.
The dataroom for the farmout of both FELs 2/13 and 3/13 opened on 11 January 2016. The target farminee candidates are major and mid-cap oil companies. We will not be providing a running commentary on the farm out progress other than to comment that the response has been very good and we are getting the target companies into the data room.
Whilst many commentators are suggesting that exploration is dead this is clearly not the case in the North Atlantic. We are pleased to note that in addition to our licence award we have new neighbours in the Porcupine basin. These include ENI (partnered with BP), ExxonMobil, Statoil, Nexen, Scotia and Woodside. Despite the low oil price the response to Ireland's 2015 Atlantic Margin licensing was very good with 43 applications received from 17 companies. This is the best response to any licensing round ever conducted in Ireland and provides a strong endorsement to our long held belief in the technical and commercial potential of Ireland's Atlantic basins. Also during 2015 and on the other side of the Atlantic in offshore
Newfoundland C$1.9 billion were committed for exploration programmes in the Flemish Pass basin (with 25% or C$450 million payable up front in cash). This is a very large sum for exploration irrespective of oil price. It is notable that some of the participants in Newfoundland are also participants in the Irish Atlantic Round namely; ExxonMobil, BP, Statoil and Nexen. Statoil has pioneered a new play in the Flemish Pass Basin and their 2013 Bay du Nord oil discovery was the largest discovery in the world that year.
Europa has been awarded three new licences in the 14th round: PEDL 299 Hardstoft; PEDL 386 Cloughton; and PEDL 286 Goole. In addition we are preparing to drill at Holmwood in PEDL 143 in the Weald Basin and the oil discovery at Wressle is being prepared for production.
During 2015 planning permission was obtained for both the surface well location and underground well path for an exploration well located in Bury Hill Wood to test the Holmwood prospect. Holmwood is a conventional oil prospect that was first identified by BP in 1988 and has been waiting to be drilled ever since. Europa intends to drill the well during the winter of 2016/17, subject to financing or an acceptable farmout. The Company is working under the supervision of Surrey County Council to discharge various conditions associated with the planning permission. Detailed well planning is also being undertaken.
Holmwood is a conventional prospect with gross mean un-risked prospective resources of 5.6 million barrels of oil (mmbo) in Portlandian and Corallian sandstones. The P90 - P10 range in resources is 1 to 11 mmbo which is the typical range for the Weald Basin based on the 14 oil and gas fields that have been found and produced to date. Were Holmwood to come in at
5.6 mmbo it would be the fifth largest oil field in onshore UK. Almost 250 wells have been drilled in the Weald Basin of Hampshire, Kent, Surrey and Sussex resulting in the discovery of some 50 million barrels of oil of which 30 million barrels have been produced to date. Peak drilling was in 1986 when 27 wells were drilled across the counties that year. Note that resources have not been estimated in Jurassic limestones equivalent to the ones found to be producing in Horse Hill.
Europa notes with interest progress at the Horse Hill-1 exploration well 12km to the east in PEDL 137 where UK Oil & Gas Investments PLC ('UKOG') have reported production at a combined average stable rate of over 1,528 bopd from Upper and Lower Kimmeridge Limestone reservoirs and Upper Portland sandstone reservoir. UKOG is also a partner in PEDL 143 and will exchange technical insights as appropriate. The Holmwood exploration well will penetrate similar stratigraphy to Horse Hill and it is possible that it may also encounter oil in Upper and Lower Kimmeridge Limestones in addition to Corallian and Portlandian sandstones. Europa has a 40% interest and is operator of PEDL 143.
Europa Oil & Gas (Holdings) plc issued this content on 14 March 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 14 March 2016 08:25:08 UTC
Original Document: http://www.europaoil.com/documents/160314March2016Investornewsletter.pdf
