Cluff Natural Resources has given up on a deal with Verus Petroleum for a North Sea license after the UK petroleum regulator decided not to grant an extension of the initial term beyond the end of the year.
In March 2016, Cluff signed heads of terms agreement with Verus Petroleum in relation to the proposed acquisition of up to a 25% participating interest held by Verus in three licenses located in the Central North Sea and the Moray Firth.
Following the heads of terms agreement, Cluff announced in May that it had entered into an exclusive option agreement with Verus Petroleum in relation to the possible acquisition of Verus’s equity stake in those three oil and gas licenses.
The option agreement included an option, at nil cost to Cluff, to acquire a 25% participating interest in License P2082 (Blocks 30/12c, 13c, 17e & 18c) which is located in the Central North Sea and contains the Skerryvore exploration prospect; and an option, at nil cost to Cluff, to acquire a 20% participating interest in Licenses P1944 (Block 14/20e) and P2156 (Block 15/11 & 16f) located in the Outer Moray Firth which contain the Fynn and Penny prospects.
The operator of the licenses has however been informed that the Oil & Gas Authority (OGA) does not intend to grant an extension of the initial term of License P2082 beyond December 31, 2016, and accordingly has been asked to relinquish the license. The OGA has however indicated that it expects to make this license available for reapplication in the 30th Licensing Round in 2017.
As a result of the OGA’s decision not to extend the initial term of License P2082 the company has determined that the option over that license will not be exercised. The company will, however, give consideration to applying for this license in the 30th Licensing Round.
The option over Licenses P2156 and P1944 in the Moray Firth containing the Fynn & Penny prospects, the initial terms of which run until November 2018 and December 2018 respectively, will continue to remain in place. The operator estimates the Fynn & Penny prospects could contain approximately 220 million barrels (55 million net) of potentially recoverable oil. In the meantime, the Company’s priority will continue to be the advancement of its existing gas assets in the Southern North Sea.
The operator estimates the Fynn & Penny prospects could contain approximately 220 million barrels (55 million net) of potentially recoverable oil.