Europa Oil & Gas has announced a farm-in agreement with a subsidiary of independent exploration and production company Kosmos Energy for two of its licencing options in the South Porcupine Basin offshore Ireland.
Under the agreement Kosmos will acquire an 85% interest and be appointed operator of both licences in exchange for fully funding the costs of a 3D seismic programme on each licence. It will also pay 85% of costs incurred by Europa to-date.
Europa's Chief Executive Hugh Mackay said: "We are very pleased to have secured a respected leading independent such as Kosmos as a farm-in partner and operator for our Irish licences. Kosmos are a highly experienced operator in frontier basins and pioneered the Cretaceous stratigraphic play that has resulted in significant exploration success in the Atlantic margin basins.
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"We look forward to working with Kosmos and their involvement is a highly significant first step towards realising the potential value of our exciting prospects in a new hydrocarbon play located in an essentially undrilled basin offshore Ireland.
"The farm-in provides recognition of the substantial potential value lying in our Irish exploration prospects. The work programme associated with the farm-in has the potential to deliver significant value realisation. Europa's retained 15% interest exposes the company to substantial upside in the event of drilling success at either or both of these prospects at a much reduced risk and cost to our shareholders."
If the companies enter into a subsequent exploration drilling phase on one or both of the blocks, Kosmos will also pay 100% of the costs of the first exploration well on each block. These have an investment cap of $90m and $110m, repsectively.
Europa's share price leapt 16.92% to 9.50p by 11:05 Thursday.
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