UK player drops Moroccan asset as farm-out plans come to naught

UK oil & gas firm drops Moroccan asset as farm-out plans come to naught

UK-headquartered and AIM-listed oil and gas player Europa Oil & Gas has decided to relinquish a license located offshore Morocco, as its farm-out process did not yield results due to low interest in deepwater oil exploration.

Illustration; Source: Europa Oil & Gas

A little over a week after the announcement about continuing the farm-out process of the Inezgane license in the Agadir Basin offshore Morocco was made, Europa Oil & Gas disclosed that the extension to the initial period of this license – announced on 21 October 2020 – had came to an end. With no farm-out deal on the horizon, the firm decided not to progress to the first extension period.

Simon Oddie, CEO of Europa, commented: “It has been a difficult decision not to progress to the first extension period as Inezgane offers significant exploration potential. However, progressing to the next stage would have required Europa to commit to drilling an exploration well, which we could not justify without obtaining another partner.

“We have been working tirelessly with advisors to secure a farm-in partner but the market appetite for offshore deepwater oil exploration is currently very low and we have ultimately been unsuccessful. During the initial period, the technical team identified multiple exploration prospects and as such we believe that Inezgane has significant potential.”

Furthermore, Europa highlights that it is in the final stages of completing all its obligations for Inezgane and expects to complete the final relinquishment report shortly. Once this has been done, the bank guarantee of $315,000 will be released and repaid to Europa. Afterwards, the UK player will have no further interests associated with this Moroccan license. 

Covering an area of 11,228 square kilometres, in water depths between 600 and 2,000 metres, the Inezgane license was awarded in 2019. Europa is the operator of this license and holds a 75 per cent interest, while ONHYM holds the remaining 25 per cent.

“We will continue to explore potential development and exploration opportunities to expand our portfolio wherever they become available, provided that these can be acquired and developed on acceptable commercial terms and within the transition context. We have a healthy balance sheet on which to execute our stated strategy,” concluded Oddie.

The UK firm is currently working on finding a farm-in partner for its FEL 4/19 license offshore Ireland, which holds the 1.5 tcf Inishkea prospect adjacent to existing infrastructure at the producing Corrib gas field

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The first phase of this license has been extended to 31 January 2024.