Cluff Natural Resources (CLNR) has signed heads of terms agreement with Verus Petroleum UK in relation to the proposed acquisition of up to a 25% participating interest held by Verus in three licences located in the Central North Sea and the Moray Firth.
According to Cluff, these licences, two of which are effectively drill ready, are operated by The Parkmead Group, which estimates the potential for 400 million barrels of recoverable oil in aggregate.
Cluff proposes initially to acquire a 5% non-operated interest in UK Continental Shelf Licences P1944 (Block 14/20e) and P2156 (Block 15/11 & 15/16f) located in the Outer Moray Firth, which contain the “Fynn” and “Penny” exploration prospects located below the shallow Tertiary sands that were found to contain heavy oil.
The heads of terms provide for an exclusive option which allows CLNR to increase its equity position in Licences P1944 and P2156 by 20% to 25% within a period of nine months following execution of the sale and purchase agreement for the acquisition of the initial 5% interest (SPA).
The heads of terms additionally provide for an exclusive option to acquire, within the same nine month period, a 25% interest in Licence P2082 (Blocks 30/12c, 13c, 17e & 18c) which is located in the Central North Sea and contains the “Skerryvore” exploration prospect.
The Skerryvore and Fynn prospects are effectively drill ready, and CLNR said it expects that a well on each prospect will be drilled within the next 12 to 24 months to take advantage of the lower cost operating environment which currently persists in the UKCS.
The consideration for the proposed acquisition and for the option agreements will be £1 each with the economic date being January 1, 2016
The proposed acquisition remains subject to the parties entering into a binding contract and other customary conditions, including but not limited to: satisfactory completion of commercial, technical and legal due diligence by CLNR; third party consent; and governmental approval.
Commenting CLNR’s Chairman and Chief Executive Algy Cluff said: “We are delighted to have been able to take advantage of the current circumstances in the North Sea which have seen a number of very high quality exploration and appraisal assets become available at low or even no cost. These proposed acquisitions complement our existing five licences in the Southern North Sea which demonstrated significant gas potential and represent the first steps to creating a diversified portfolio of exploration and appraisal assets.
“Our objective now is to complete the acquisition process and begin working with our new partners to fully appraise the significant production potential of these exciting assets.”