Trap Oil gains on farm-in agreement with Extract Petroleum

Trap Oil advanced Tuesday on news the oil and gas company completed a farm-in agreement with Extract Petroleum for acreage in the UK.

The acreage, awarded to Trap Oil in the 27th Seaward Licensing Round, includes one promote licence covering 13 blocks totalling 1,026km2.

Trap Oil, focused on the North Sea, will become operator of the acreage and farm-in for a 100% working interest while Extract will retain 1% royalty interest over any future production from the area. The agreement is subject to approval from the Department of Energy and Climate Change.

The group's farm-in obligations include funding and undertaking a preliminary evaluation of the potential for production from tight reservoirs on the acreage.

If initial results prove promising, Trap Oil will secure partners to develop the concept with the aim of drilling proof of concept wells.

Trap Oil wants a carried interest in the initial drilling in return for developing the prospects to a drill ready stage.

Mark Groves Gidney, Chief Executive Officer of Trap Oil, said: "This farm-in agreement with Extract plays to our strengths as a technically led company pursuing innovative initiatives relating to the exploration and extraction of oil from potentially high impact prospects in the UK North Sea."

Shares rose 1.69% to 15.00p at 8:20 Tuesday.

RD