Upland Resources is set to farm into an offshore block in the Inner Moray Firth off Scotland, UK, and plans to start drilling in late 2018.
The company has signed a farm-in agreement with Corallian Energy Limited for a 40 percent stake in UK Seaward Production Licence P2235 (UKCS Block 11/24b). The block contains the Wick prospect, which could hold in-place P50 resources of around 250 MMbbl. Corallian Energy is a private oil and gas firm founded in 2015.
Upland has described the Wick prospect as a a relatively low risk, low cost, potentially transformative near term drilling opportunity using a jack-up rig in late 2018, adding that Corallian has already begun environmental permitting for the well.
Upland said on Thursday it would pay 53.33 percent of the first £4.2 million of costs related to the environmental survey and the first Wick well; costs above that cap will be funded pro rata to interests in the Licence.
The Wick well is currently estimated to have a total dry-hole cost of about £4.2 million. Completion of the P2235 Farm-in Agreement is conditional on, inter alia, the approval by the UK Oil & Gas Authority of Upland UK as a farminee to the Licence, availability of funding to Upland UK sufficient to satisfy its obligations under the P2235 farm-in agreement and the Licence continuing in full force and effect.
Steve Staley, CEO of Upland Resources Limited, said:
“I am delighted to announce this deal, which will (subject to completion) move the Company into the second phase of our strategy. The Wick Prospect and other potential targets within P2235 could host large volumes of hydrocarbons which, with near term drilling, gives Upland a clear pathway to potentially transformative value growth.
“We have taken our time in assessing this opportunity, in particular to gain a good understanding of the key fault risk in the Wick Prospect, before making an investment decision. This, alongside the continued cost pressures within the rig market, therefore presents us with a very exciting opportunity.
I look forward to updating shareholders as to our progress towards exploratory drilling on Wick in due course.”