Europa Oil & Gas has through its associated company Antler Global signed a binding farm-out agreement with China’s Fuhai (Beijing) Energy to sell a 40% interest in the EG-08 production sharing contract offshore Equatorial Guinea.
Under the agreement, Fuhai will acquire a 40% working interest in the EG-08 block in return for funding 95% of the costs of drilling and testing the Barracuda exploration well, up to a cap of $53 million. Antler will fund the remaining 5% of the well cost, Europa said.
Antler will retain operatorship of the block. Any cost overruns above the $53 million cap will be shared equally between Antler and Fuhai, while Fuhai will have a preferential right to recover its carried costs from future commercial hydrocarbon sales. A portion of the carried amount will accrue interest, capped at 5% per year, which will be cancelled if the Barracuda prospect does not result in a commercial discovery.
Europa holds a 42.9% equity interest in Antler, which following the transaction will hold a 40% working interest in the EG-08 licence. Fuhai will also hold 40%, while the remaining 20% is held by state oil company GEPetrol on behalf of Equatorial Guinea.
The Barracuda prospect is estimated to contain 893 billion cubic feet of gas, Europa said, with prospective volumes across the EG-08 block estimated at 2.213 trillion cubic feet on a Pmean basis following updated geophysical analysis.
Block EG-08 lies offshore Equatorial Guinea in the Douala Basin and covers 731 square kilometers. The license contains three high-graded prospects covered by 3D seismic data, located in about 80 meters of water and drillable with a jack-up rig.
The transaction is subject to approval by Equatorial Guinea’s Ministry for Mining and Hydrocarbons and overseas investment approval from China’s Shandong provincial authorities, Europa said.
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