Arenite sale of half-share in N. Sea gas field depends on buyer hitting production targets

Aberdeen-based Arenite Petroleum has sold a 50%-share in a N. Sea gas-field exploration licence to Egdon Resources.

The price of £750,000 is dependent on the field delivering a pre-determined set of production milestones.

Mike Cooper, Arenite chief executive, said: “We are delighted that Egdon recognises the significant extension of the Resolution discovery into block 41/24 where three wells have each tested over 15 million standard cubic feet of gas per day in a shallower horizon than at Resolution.

“Though the outlook for the oil and gas sector has improved in the last 12 months, it has not been sufficient to deliver a farminee for the P2304 licence in isolation.

“However, by effectively combining the two licences, Egdon and the Oil & Gas Authority have had the vision of making the ‘pie bigger’, significantly improving the opportunity quality and dramatically lowering the economic threshold.

“This deal is a win-win for all parties and is consistent with OGA’s MER strategy.”

The P2304 licence was awarded in the 28th licensing round with an effective date of 1 December 2015.

By consolidating licences P1929 and P2304 under Egdon’s 100% control, the regulator is minded to extend the initial term of the licence until 1 December 2018.

The price for the share in the P2304 licence is based conditional payments to Arenite of up to £725,000 net (being 50% of £1,450,000 gross) as listed below:

On completion of the acquisition of a 3D survey over any part of the Licence (other than a third-party survey to which neither the P2304 Licensees nor the licensees of the P1929 licence have access) a cash payment of £50,000

• On completion of the drilling of the first well located wholly or partly within the area covered by the Licence a cash payment of £100,000.
• On first production, other than testing, from any well located wholly or partly within the area covered by the Licence a cash payment of £100,000.
• On reaching a total production of five billion standard cubic feet of gas (5 bcf) (or oil equivalent) from any wells located wholly or partly within the area covered by the Licence a cash payment of £200,000.
• On reaching a total production of twenty billion standard cubic feet of gas (20 bcf) (or oil equivalent) from any wells located wholly or partly within the area covered by the Licence a cash payment of £1 million.

4 Dec 2017