Shares in Xtract Energy PLC (LON:XTR) were lifted in afternoon London trade by news that its 50.02 percent owned associate Elko Energy Inc has secured changes to a Danish North Sea licence giving it access to a promising drilling location.
Elko announced in May that Norwegian Energy Company ASA (Noreco) was farming into the 02/05 licence with a 47 percent working interest, while Elko would retain 33 percent and the remaining 20 percent would continue to be held by the Danish North Sea Fund (DNSF).
As announced at that time, the 02/05 partners were engaged in further technical studies to optimize the location of the first exploration well through which the partners intended to test the overall Rotliegendes play concept.
The studies’ overall technical risk assessment concluded that the optimal drilling location, to test the Rotliegendes play, was outside of the 02/05 licence, in an area which extends immediately to the west of the licence.
Subsequently, the 02/05 licence group submitted an application to the Danish Energy Agency for an adjoining area immediately to the west of the 02/05 licence area. The filing contained a proposal for a significant partial relinquishment of the original 02/05 area.
Elko said today that the licence group has been awarded a new licence 01/11 of some 1900 square kilometres, immediately to the west of the original 02/05 licence area and covering the optimal drilling location. The partners relinquished 3645 square kilometre of the original licence. The balance of 1745 square kilometres of the original 02/05 licence area combined with the new licence totals 3645 square kilometres.
The new licence requires that an exploration well is drilled within 24 months and is valid for an overall six year period. The partners have already selected the specific well location and intend to drill the well in 2011. The well will be known as 'Luna'.
Xtract shares rose in response to the Elko comments, and at 2.05 pm, were trading up 5 percent at 3.62 pence.
Xtract identifies and invests in a portfolio of early stage oil and gas assets and business interests with significant growth potential.
Elko is a Canadian registered oil & gas exploration company which has interests in exploration and production licences in the Danish and Dutch North Sea.
Xtract has a 50/50 joint venture with Merty Energy of Turkey, called Extrem Energy. The JV’s aim is to create a new medium-sized oil and gas exploration and production business, initially focused on Turkey. Extrem has a portfolio of licence interests including the high potential prospect at Candarli Bay in south-west Turkey.
It also holds 25 percent of Zhibek Resources, an oil and gas exploration and production company which has a 72 percent interest in the Tash Kumyr exploration licence in the Kyrgyz Republic. Xtract has entered a farm-out agreement to fund a seismic and drilling programme for 2008-2011.
Xtract's wholly owned subsidiary, Xtract Oil Ltd (XOL), is focused on the development of the company's oil shale resources in Australia and the technology for oil extraction from oil shale resources. Xtract has oil shale exploration rights over mining tenements in the Julia Creek area of Queensland. In addition to evaluating third party technologies, XOL has been developing proprietary technology for the commercial extraction of liquid hydrocarbon products from oil shale.
Finally, 70 percent controlled Xtract Energy (Oil Shale) Morocco SA (XOSM) is a joint venture with Alraed Ltd Investment Holding Co WLL, a company controlled by Prince Bandar Bin Mohd. Bin Abdulrahman Al-Saud of Saudi Arabia.
XOSM has signed a memorandum of understanding with the Office National des Hydrocarbures et des Mines for the purposes of evaluation and possible development of an oil shale deposit near Tarfaya, in the south west part of Morocco.