Norwegian Energy Company ASA (Noreco, OSE:NOR) has entered into a farm in agreement with Elko Energy to become a 47% owner and operator for the 02/05 license in Denmark. Elko will retain 33% of the license, while Nordsøfonden owns the remaining 20%.
The 02/05 license is located on the Ringkøping Fyn High and the area covers several large Chalk and Rotliegendes prospects. Drilling costs in the area are expected to be moderate due to shallow water depths and relatively shallow drilling targets. The partners are currently undertaking technical studies to optimize the location for the first exploration well which is planned to be drilled in 2011.
Under the terms of the agreement, Noreco will reimburse Elko 959 000 USD for its share of past license cost. In the event of a discovery, Noreco will cover Elko’s share of the costs associated with the discovery well production test. Effective date of the transaction is 1 April 2010. The agreement is subject to approval from the Danish Energy Agency.
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Source: noreco, June 2, 2010;