Europa Oil offloads North Lincolnshire shares to Union Jack

27th Sep 2016 14:04

(ShareCast News) - Oil and gas exploration, development and production company Europa Oil & Gas announced on Tuesday that it has signed a sale and purchase agreement in relation to its 33.34% interest in the PEDL180 and PEDL182 licences in North Lincolnshire with Union Jack Oil.The AIM-traded firm said the licences cover the Wressle discovery at PEDL180, and the Broughton North prospect at PEDL182.Under the terms of the agreement, Union Jack will acquire a 3.34% working interest in the licences from Europa for a cash consideration of £0.6m.The transaction implies a £5.4m mark to market for Europa's remaining 30% interest in the licences, the board explained.Wressle is anticipated to commence production at a gross rate of 500 barrels of oil per day in early 2017, with Europa's anticipated net share of 150 bopd from Wressle expected to more than double existing production from the West Firsby and Crosby Warren fields and Whisby-4 well."We consider this transaction to represent a sensible monetisation of part of the asset now it has been largely de-risked, whilst still retaining sizeable exposure to production and upside on the other reservoirs," said Europa CEO Hugh Mackay."Importantly, this transaction provides investors with a point of reference for the value of our remaining 30% interest in the licences."At £5.4m our 30% interest in these two licences accounts for almost half our current market capitalisation."Mackay said PEDL180 and 182 remained just two of a portfolio of licences the company holds."These include three UK onshore fields which in H1 produced 124 boepd net to Europa; PEDL143 containing the Holmwood prospect in the Weald Basin, which we rate as the best undrilled conventional prospect onshore UK; and seven licences offshore Ireland which we estimate to have gross mean un-risked prospective and indicative resources of more than 4 billion barrels of oil equivalent and 1.5 tcf of gas."The funds released will be used to fund our share of drilling the Holmwood exploration well in PEDL143, which we anticipate drilling in 2017 subject to obtaining the relevant permits and permissions," Mackay explained."In the meantime, we continue with our strategy to advance and monetise our multistage portfolio of licences, and in the process generate value for our shareholders."