InfraStrata plc has, together with joint venture partners Corfe Energy Limited and Brigantes Energy Limited, signed an agreement with Southwestern Resources Limited with respect to offshore Dorset licence P1918 in UK.
Southwestern is a new UK based company set up for the purpose of participating in oil and gas exploration and production in the UK.
Under the terms of the agreement, Southwestern will acquire a 10% interest in the P1918 licence, subject to Department of Energy and Climate Change (“DECC”) approval, in return for funding 100% of the next £500,000 of expenditure on the licence and thereafter funding its own share. In addition, it has been granted an exclusive option to acquire a further interest in the licence in return for funding future drilling activity.
Subject to the approval for the licence interest assignments by DECC, the licence interests will be as follows: InfraStrata (Operator) 54.00%; Southwestern 10.00%; Corfe (40% owned by InfraStrata) 19.80%; Brigantes (40% owned by InfraStrata) 16.20%; net InfraStrata 68.40% interest.
The initial £500,000 funding will include the cost of acquiring two new 2D seismic lines over the Purbeck Prospect, in order to complete the well design for the proposed California Quarry-1 well and also undertaking a Pre-stack Depth Migration re-processing of two offshore 3D seismic surveys in the north of Block 98/11 acquired during 1992 and 1999.
The reprocessing of the offshore data will focus on the undeveloped Colter, Old Harry and Ballard Point discoveries. The largest of these, the Colter Prospect, is located within a fault block immediately to the south of the giant Wytch Farm oilfield. The 98/11-3 well was drilled on the prospect in 1989 by Gas Council (Exploration) Ltd and encountered a 10.5 metres vertical oil column in the Sherwood Sandstone with an oil-water-contact at a depth of 1,739 metres subsea. Reservoir quality is very similar to that observed in Wytch Farm, the company said.
Southwestern has been granted an exclusive option until July 2015 to acquire a further 65% interest from InfraStrata and partners on a pro-rated basis by funding 100% of the costs of an offshore exploration well in the P1918 licence. If the option were exercised, InfraStrata’s net interest in P1918 would be 19%, with its costs carried through the drilling of the well.
In the event that Southwestern decides not to exercise the option to drill an offshore well for the first well, it has been granted an option, until September 2015, to acquire a further 40% licence interest by funding 100% of the costs to drill the California Quarry-1 well. If this alternative option were exercised, InfraStrata’s net interest in P1918 would be 38%, with its costs carried through the drilling of the well. The proposed California Quarry-1 well is an onshore to offshore well. Since it is necessary for the area from which a well is drilled to be held under a petroleum licence, either by InfraStrata or by a third party, terms have also been agreed with Southwestern to apply for the required onshore area as part of the UK 14th Landward Licensing Round.
A well is required to be drilled by February 2016, the end of the first term of the licence, to retain P1918 into its second term.
Commenting on the announcement, Andrew Hindle, CEO of InfraStrata said:
“We are delighted to welcome Southwestern to the joint venture as we enter the next exciting phase of exploration in the Wessex Basin of Southern England. The technical work programme over the next nine months to be funded by Southwestern will better define the discovered oil and gas and prospectivity on the licence.
“The farmout is consistent with the Company’s business plan to secure funding for its exploration programmes by introducing partners and have its costs carried through drilling.“