Adriatic Oil in UK North Sea Farm-In
Adriatic Oil Plc has entered into a 25% Farm-In to Seaward Production Licence P1921 in relation to Blocks 12/18 and 12/19c (the “Licence”), which are located in the Inner Moray Firth area of the UK’s North Sea. Adriatic has also secured an option whereby, for an increased capital commitment, the Company can increase its stake in the Licence to 50%.
The Farm-In has been approved by the UK Department of Energy and Climate Change.
Blocks 12/18 and 12/19c (the “Blocks”)were originally applied for and secured under licence in the 26th UK Seaward Licensing Round by Elixir Petroleum Limited (“Elixir”), which was the 100% interest holder (pre-Farm-In) and operator. The work obligations in relation to the Licence comprise the purchase of 3D seismic data and a “drill-or-drop” decision is required to be made by early 2014.
The Blocks are contiguous and are located approximately 150km north east of Inverness, in a water depth of approximately 75m. The Blocks lie to the north east of the Beatrice oil field, located in Block 11/30a and to the west of the Captain oil field in Block 13/22a.
A regulatory announcement made by Elixir in January 2012 stated that “A single large stratigraphic prospect has been identified in the Middle Jurassic Beatrice Formation on the northern edge of the Smith Bank High. The prospect is predicted to have Beatrice Formation sands as the reservoir, which has been identified as an acoustic impedance anomaly on several 2D seismic lines. No wells to date have targeted the Smith Bank High in the Blocks.”
Under the terms of the Farm-In, Adriatic has agreed to pay a cash consideration of £9,000 and to fund the cost of interpreting 3D seismic data, up to a maximum of £60,000. Costs thereafter will be met pro rata to participating interests.
Once the 3D seismic data has been interpreted, the Company will be entitled to exercise the Option to acquire a further 25% interest. If it is determined that the data needs to be reprocessed, then the consideration will comprise an obligation to pay 50% of Elixir’s then 75% participating share of the reprocessing costs. If the data does not require reprocessing, then the consideration will comprise £100,000 in cash and the grant of a 10% gross overriding royalty on the Company’s participating interest.
Adriatic’s Managing Director, Bruno Müller said: “We are pleased to have secured an initial 25% Farm-In into these two Blocks, which complement our existing interests related to offshore Ireland. We are looking forward to working with Elixir with a view to progressing the potential oil prospect which Elixir has named the “Sunset” prospect and which lies across the two Blocks towards drill ready status.”
December 7, 2012