UK’s Baron Oil has entered into a farm-out agreement with Corallian Energy to earn a five percent working interest in the UK Continental Shelf License P1918.
Baron Oil said on Tuesday that the license contains the Colter Prospect where a well would be drilled later this year.
The Colter Prospect lies in Bournemouth Bay, immediately southeast of the Wytch Farm oilfield which has been developed from onshore facilities.
Mapping of 3D seismic data by Corallian indicates that the 98/11-3 well, which encountered oil in the Triassic Sherwood sandstone reservoir in 1986, lies on the flank of a structure that has the potential to hold unrisked P50 Prospective Resources of 26.8 million barrels of oil recoverable from this reservoir.
The prospect will be appraised by a well drilled to a total depth of 1,800 meters. Baron added that the well was planned for the second or third quarter of 2018, subject to regulatory approvals, at a total cost of £6.4 million ($8.85 million).
Under the terms of the agreement with Corallian, Baron will pay 6.67% of the costs related to this well, capped at a gross cost of £8.0 million. Costs above this cap would be funded at five percent.
Baron said that this included a five percent share of back costs unrelated to the well, the total payable by the company was currently estimated at some £425,000 to earn a five percent interest in the license.
Farm-out agreement for Wick prospect
Baron also said that it signed a definitive farm-out agreement with Corallian under which Baron would pay 20 percent of the costs for the first well on the Wick Prospect to earn a 15 percent interest in license P2235.
Malcolm Butler, chairman and CEO of Baron, said: “I was deeply involved in the interpretation and identification of the Colter Prospect and I am very pleased that Baron will be able to participate in the drilling of it, albeit with a small interest. […] any discovery would likely make use of existing facilities, enabling development to take place very quickly.
“The signature of this farm-out agreement and that for the Wick Prospect completes a portfolio that is planned to give Baron’s shareholders exposure to three significant wells in 2018.”