Europa Oil & Gas Holdings Plc (LON:EOG) has agreed a farm-out deal with Angus Energy Plc (LON:ANGS) for the Holmwood project, onshore UK.
Angus acquires a 12.5% stake in Holmwood which will be host to the next well to test the kimmeridge limestones in the UK’s Weald basin – following on the group’s apparent success at the nearby Brockham well.
To acquire the stake in Holmwood, Angus agrees to pay 25% of the costs of the upcoming well (up to a gross cost of £3.2mln) and will cover 12.5% of the costs above that cap.
Europa will retain a 20% stake in Holmwood and its participation will now be fully covered (assuming the well is with the £3.2mln budget).
“Following today’s farmout, Europa will have a fully carried 20% share in Holmwood and the benefit of a partner with expertise in the Weald basin,” said Hugh Mackay, Europa chief executive.
“As the operator of the nearby Brockham oil field, Angus can provide invaluable technical insights in tandem with our other partners including UKOG, a major stakeholder in the Horse Hill discovery.
Mackay added: “In line with our strategy to expose our shareholders to material rewards through the drillbit while minimising exposure to exploration risk, this is the fourth farm-out we have secured for our UK licences within the last 12 months.”
The partners list for the Holmwood project now comprises Europa (operator, with 20%), UK Oil & Gas Investments (LON:UKOG) with 30%, Egdon Resources Plc (LON:EDR) with 18.4%, Angus Energy with 12.5%, Warwick Energy with 10%, Union Jack Oil PLC (LON:UJO) with 7.5% and Altwood Petroleum with 1.6%.
The proposed Holmwood well is ostensibly targeting between 1mln and 11mln barrels of oil resources in shallower oil reservoirs, but significantly the well will also target the deep and potentially much bigger Kimmeridge limestone play which has been successfully encountered at both the Horse Hill and Brockham projects nearby.
Planning permission is in place for Holmwood and the partners are working towards the start of operations later this year.