Noreco Quits Crazy Horse Ops (UK)
Trapoil, the independent oil and gas exploration, appraisal and production company focused on the UK Continental Shelf (“UKCS”) announces an update covering arrangements with Norwegian Energy Company UK Limited (“Noreco”).
Proposed Arrangements and Revised Equity Interests
Trapoil has been informed by Noreco that it no longer intends to drill the Crazy Horse well, which was scheduled for 2014. As a result Trapoil and Noreco conditionally agreed on 18th October 2013 to amend the existing legal arrangements between them. DECC have confirmed that in the circumstances it will Determine the Crazy Horse licence on 12 December 2013, with no further obligation to Trapoil.
The principal amendments comprise:
· Noreco will, on behalf of Trapoil, pay all costs relating to seismic acquisition and the processing or purchase of speculative seismic data to fulfill the firm obligation to DECC in respect of the Homer licence by late 2014, estimated to be circa £1.5m.
· Noreco will provide Trapoil with a carried interest of 10 per cent. through the operations on the first well, should one be drilled on the Homer licence. This will replace the Company’s existing 5 per cent. carried interest. The working interests of both Noreco and Trapoil will remain at 50 per cent.
· Noreco will assign to Trapoil its entire 10 per cent. working interest in the Romeo licence. An existing 3.125 per cent. carried interest provided by Noreco (which is inclusive of 1.696 per cent. being carried by Total) will be extinguished. As a result Trapoil’s existing carried interest will fall to 9.375 per cent. The revised paying interests will be Suncor 57.857 per cent, First Oil 17.143 per cent, Total 11.875 per cent and Trapoil 13.125 per cent.
Completion of the proposed equity transfers set out above is subject, inter alia, to DECC, and where required partner, approvals.
Mark Groves Gidney, Chief Executive Officer of Trapoil, commented:
“It is clearly disappointing that our commitment to drill the Crazy Horse well has not been matched by our partner but in the circumstances they currently have other priorities, which we understand.
“I am pleased to report that, following the expiry of the Crazy Horse licence and after taking account of the proposed transactions above, Trapoil’s current total outstanding commitments to all third parties have now been reduced to approximately £3m, being our 20 per cent. paying interest in the Niobe well which is scheduled to be drilled in 2015 and some seismic on our Valleys licence.
“With continued positive net income from Athena and a healthy bank balance the company is in a sound financial position to consider future activity, including any remedial work at Athena and fresh commitments to explore with our new partners.”
Trapoil, via its wholly owned subsidiary Trap Oil Limited, holds a 22 per cent. working interest (17 per cent. paying and 5 per cent. carried interest) in Licence P.1650 (Block 14/13) (“Crazy Horse”) and a 50 per cent. working interest (45 per cent. paying and 5 per cent. carried interest) in Licence P.1989 (Blocks 14/11, 12 & 16) (“Homer”) which were acquired by the Company in February 2009 and January 2013 respectively as part of successful 25th and 27th Licence Round awards. Noreco owns the remaining equity in respect of these licences and is the operator.
In addition, Trapoil holds a 12.5 per cent. carried interest in Licence P.1666 (Block 30/11) (“Romeo”). The other partners in Romeo are the operator, Suncor Energy UK Limited (“Suncor”), which holds a 57.857 per cent paying interest, First Oil and Gas Limited (“First Oil”), which holds a 17.143 per cent paying interest, Total E&P UK Limited (“Total”), which holds a 13.5714 per cent. paying interest and Noreco, which holds a 11.4286 per cent. paying interest.
October 21, 2013