EUROPA OIL & GAS (HOLDINGS) PLC
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 Net Volumes
Volumes attributable
to Europa
before
transaction
Oil Gas Oil and Oil Gas Oil and
MMstb Bscf Gas* MMstb Bscf Gas*
MMboe MMboe
Wressle
2P Ashover Grit and Wingfield 0.62 0.20 0.65 0.21 0.07 0.22
Flags
2C Penistone Flags 1.53 2.00 1.86 0.51 0.67 0.62
Broughton North
Mean Unrisked Prospective 0.51 0.51 0.60 0.17 0.17 0.20
Resources
Gross Net Volumes
Volumes attributable
to Europa
after
transaction
Oil Gas Oil and Oil Gas Oil and
MMstb Bscf Gas* MMstb Bscf Gas*
MMboe MMboe
Wressle
2P Ashover Grit and Wingfield 0.62 0.20 0.65 0.124 0.04 0.13
Flags
2C Penistone Flags 1.53 2.00 1.86 0.301 0.40 0.37
Broughton North
Mean Unrisked Prospective 0.51 0.51 0.60 0.10 0.10 0.12
Resources
*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.
Europa Oil & Gas () : Sale of Interest in Wressle Discovery to Upland
November 24, 2016 at 08:29 am EST
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