Europa Oil & Gas announces Kosmos Energy farm-in on Irish licenses
LONDON -- Europa Oil & Gas has announced a farm-in agreement with a subsidiary of independent exploration and production company Kosmos Energy for its two licensing options, LO 11/7 and LO 11/8, in the South Porcupine basin offshore Ireland.
Under the terms of the agreement, Kosmos will acquire an 85% interest and be appointed as operator of both licenses, will fully fund the costs of a 3D seismic program on each license and will pay 85% of costs incurred by Europa to date.
Contingent upon an election of the companies to enter into a subsequent exploration drilling phase on one or both of the blocks, Kosmos will also incur 100% of the costs of the first exploration well on each block. The first exploration wells on LO 11/7 and LO 11/8 have investment caps of $90 million and $110 million, respectively. Costs in excess of the investment cap would be shared between Kosmos (85%) and Europa (15%).
As set out in the Europa’s technical update announcement from January, in respect of these licenses, the company commenced the farm-out process with the objective of finding a partner with the technical and financial resources, and the strategic intent, to pioneer a new hydrocarbon play in a deepwater frontier basin. The transaction with Kosmos represents the successful conclusion of this process. The completion of the farm-in agreement remains subject to Irish governmental approval.
LO 11/7 and LO 11/8 each cover an area of approximately 1,000 sq km in the highly prospective South Porcupine basin offshore Ireland. The licenses have been mapped using existing 2D seismic data and are undrilled. Europa’s technical work to date has identified two previously unknown prospects in the Lower Cretaceous stratigraphic play: Mullen in LO 11/7 and Kiernan in LO 11/8.