A subsidiary of UK-headquartered and AIM-listed oil and gas company Europa Oil & Gas has signed non-binding heads of terms (HoT) with an undisclosed energy company to farm out an interest in a production sharing contract (PSC) offshore Equatorial Guinea.
The UK firm disclosed that its affiliate Antler Global entered into detailed commercial discussions with what it says is an energy major for its stake in the EG-08 PSC offshore Equatorial Guinea, leading to the HoT deal.
Europa has a 34.32% interest in the PSC through its 42.9% ownership in Antler Global, which in turn holds an 80% working interest in EG-08. The state oil company, Guinea Ecuatorial de Petroleos (GEPetrol), owns the remaining 20%.
“The signing of these heads of terms is a very positive step forward and comes after an extensive period of negotiations with what we believe is an excellent partner,” said William Holland , Chief Executive Officer (CEO) of Europa.
“ Although there are no guarantees, I am confident that we will progress to signing a farm out agreement in the coming months and will then move to drilling the Barracuda well as soon as possible thereafter. I look forward to updating the market of our progress in due course.”
Europa believes a discovery in EG-08 could be developed quickly with possible offtake to Chevron’s Alen platform located 9 kilometers away. Hydrocarbons would be processed, transhipped, and exported through Chevron’s infrastructure to an FPSO to export liquids, while gas would be transported via the Chevron pipeline to the Alba gas plant facility on Bioko Island.
The EG-08 block is believed to contain 2.116 trillion cubic feet (tcf) of gas and condensate, with the primary prospect being Barracuda, which is estimated to hold 798 billion cubic feet (bcf). The license has three high-graded prospects which Europa thinks have similar AVO characteristics as the Alen and Aseng fields and other discoveries in Chevron’s Blocks O and I.
According to the UK firm, the initial phase of the EG-08 license is a two-year drill or drop period, during which the existing 3D seismic data will be refined and a farmout process launched. This is followed by a two-year second period, two one-year extension periods, and a development phase.
In addition to this development in the African country, Equatorial Guinea’s Ministry of Mines and Hydrocarbons recently announced it would launch a new oil and gas licensing round to up the offshore exploration and production ante. The promotion of new acreage is seen as essential to ensuring long-term energy security.