Commenting, Cluff’s Chief Executive Graham Swindells said:
“We are delighted to be able to announce the farm-out of Licence P2252 and the terms of an option to farm out Licence P2437 with a partner of this standing. This partnership is a clear endorsement of the quality of the licences in our portfolio and demonstrates the Cluff technical team’s ability to identify and transform overlooked or less understood opportunities.
We are particularly excited at the prospect of embarking on our partnership with Shell with both parties sharing a commitment to further development in the Southern North Sea.
Most importantly, we now have direct visibility over the route to future drilling activity, and the potential to create further significant value for shareholders.
We look forward to building our partnership with Shell and successfully developing these prospects.”
Under the terms of the Farm Out Agreement, Shell will acquire a 70% working interest in Licence P2252, and be appointed as the licence operator, in return for paying 100% of the costs of an agreed forward work programme to the earlier of 31 December 2020 or the date on which a well investment decision is made.
Cluff will retain a 30% non-operated interest in Licence P2252.
The agreed work programme for P2252 includes the shooting of not less than 400 km2 of new broadband 3D seismic data over the Pensacola prospect in the summer of 2019, subsequent processing of new and existing seismic data and sub-surface studies required to support a well investment decision before the end of 2020.
All costs in relation to P2252 following the well investment decision (or 31 December 2020, if earlier) will be satisfied by each party in proportion to their working interests.
Completion of the farm out is conditional on the entering into of a Joint Operating Agreement and the obtaining of regulatory consent from the Oil & Gas Authority, subject to a six month backstop.
P2252 contains the Pensacola prospect which is estimated to contain unaudited mean GIIP of 566 billion ft3 (equivalent to approximately 100 million boe).
The Company has granted Shell the Option to acquire a 50% working interest by 30 April 2019. If the option is exercised the Company will retain a 50% working interest and operatorship until a well investment decision is made with Shell paying the costs to date. The consideration receivable by the Company is a total of US$600 000 which is comprised of an initial payment and a further payment upon completion.
If a decision is taken to drill an exploration well on P2437, Shell will pay a share in the proportion of 1.5:1 of the cost of an exploration well and the well test subject to an aggregate cap of US$25 000 000. Shell would therefore pay 75% of costs up to a total of US$25 000 000. Any cost over-runs associated with the well above this level are to be satisfied by each party in proportion to their working interest.
If the Option is exercised completion will be conditional upon agreeing a Joint Operating Agreement and receiving consent from the Oil & Gas Authority.
P2437 contains the Selene prospect which is estimated to contain unaudited mean GIIP of 509 billion ft3 (equivalent to approximately 90 million boe) and is located adjacent to Shell operated infrastructure associated with the Barque gas field.
Licence P2252 was awarded to the Company in the UK’s 28th Licensing Round. It contains the Pensacola prospect which is estimated to contain unaudited mean GIIP of 566 billion ft3 (equivalent to approximately 100 million boe).
Licence P2437 was awarded to the Company in the UK’s 30th Licensing Round. It contains the Selene prospect which is estimated to contain unaudited mean GIIP of 509 billion ft3 (equivalent to approximately 90 million boe) and is located adjacent to Shell operated infrastructure associated with the Barque gas field which exports gas into the Bacton Gas Terminal.
Read the article online at: https://www.oilfieldtechnology.com/offshore-and-subsea/08022019/cluff-natural-resources-farm-out-of-licences-p2252-and-p2437-to-shell-uk-limited/
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