Oil and gas company i3 Energy has executed the farm-in agreement with Europa Oil & Gas following Europa's completion of its equity fundraising to fund its share of the upcoming Serenity appraisal well in the UK North Sea.
Under the agreement, Europa will acquire a 25% non-operated working interest in a sub-area of UKCS Licence P.2358 Block 13/23c containing the Serenity discovery by funding a 46.25% paying interest for one appraisal well on the field, and i3 will retain a 75% operated WI in the New Serenity Block.
The well cost is estimated to be around £14 million and Europa's 46.25% paying interest will be applied up to a capped gross well cost of £15 million. Any well costs exceeding £15 million will be paid by the companies in proportion to their respective working interests. Completion of the deal and transfer of the licence interest to Europa will be subject to relevant approvals and Europa funding an escrow account with its paying interest obligation.
Following this farm-out i3 will retain a 100% WI in the remainder of Block 13/23c which contains the Minos High prospect and Liberator discovery.
Majid Shafiq, CEO of i3 Energy plc, commented: "i3 is delighted to announce the execution of the farm-in agreement with Europa and we will now commence the detailed planning and permitting process for the Serenity appraisal well, which we now expect to spud in late Q3 this year."
Drilling in Q3 of 2022
According to Europa Oil & Gas, Serenity is strategically located near existing infrastructure in the North Sea, however, the appraisal well could provide sufficient recoverable volumes for a standalone development.
Simon Oddie, Europa Oil & Gas CEO said: "I'm delighted to announce the signature of this farm-in which fulfills our promised goal of adding an appraisal asset to the Europa portfolio. Serenity is a late-stage appraisal and development asset that provides our shareholders with exposure to a very exciting asset that could deliver significant near-term value to our shareholders with the drilling of the Serenity appraisal well expected in late Q3 of 2022.
"The objective of the well is to prove up additional volumes of hydrocarbons beyond those encountered in the original discovery well, which alone are considered commercially viable. It is a welcome addition to our existing producing and high impact exploration assets and part of our long-term strategy to create a balanced portfolio of high-quality assets with the view of creating long-term value for our shareholders."