Tulip Oil will pick up partner PA Resources’ 30% equity in blocks Q7/Q10a off The Netherlands. Under the agreement, Tulip Oil will pay a consideration of almost US$1.6 million upon completion of the transaction; further payment is contingent on certain asset milestones being met.
Mark McAllister, chief executive officer of PA Resources, called the acreage non-core blocks and said in a statement that the move was consistent with the company's focus on assets with appreciable upside in the central North Sea, along with North and West Africa.
Prior to the transaction, The Netherlands-based Tulip held the operatorship and a 30% stake in blocks Q7/Q10a.
The 53sq km Block Q10a contains the two blocks’ only existing gas find: the Q7-FA gas accumulation. A 309sq km seismic survey was acquired on Block Q10a and the nearly-419sq km Block Q7 in 2010, which Tulip Oil said found perspective volumes of oil and gas. The operator also finalized a field development plan for Q7-FA. Appraisal well drilling is planned for 2015.
Sweden's PA Resources obtained its 30% stake in Q10a in October 2008, when the Dutch Ministry of Economic Affairs split what the then-Block 10 in the Anglo-Dutch Basin into Block Q10a, covering the northeastern sector, and Block 10b, covering the southwestern sector. When PA Resources farmed into Block Q10a, Dutch state-owned EBN exercised its right to acquire 40% on Block Q7, so PA Resources’ equity was reduced from 50% to 30%.
Following the transaction, operator Tulip Oil will hold 60%, with partner EBN retaining its 40% stake.
PA Resources said that reflecting only the firm consideration, the divestment from the two blocks resulted in a book loss of approximately $2.6 million, which will be recorded in 4Q.
Map of blocks Q7/Q10a from Tulip Oil.