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LONDON (Alliance News) - Europa Oil & Gas (Holdings) PLC on Monday said it has struck a deal to sell a 12.5% stake in the onshore UK licence in southern England containing the Holmwood prospect to fellow London-listed Angus Energy PLC.
Europa intends to keep a 20% interest in PEDL143, where a well is expected to be drilled later this year targeting the 5.6 million barrels of oil thought to lie within the Holmwood prospect.
The other partners involved in Holmwood include UK Oil & Gas Investments PLC, which will own 30% of Holmwood after the transaction, Egdon Resources UK Ltd will hold 18.4%, Union Jack Oil PLC will hold 7.5% and non-listed Warwick Energy will hold 10%, with Altwood Petroleum Ltd holding the other 1.6%.
In return for the 12.5% stake, Angus will 25% of the costs to drill an exploration well at Holmwood capped at a maximum gross sum of GBP3.2 million, plus 12.5% of all non-well costs and gross well costs above the cap.
Europa will pay 20% of all non-well costs and gross well costs above the cap. Europa is essentially carried for GBP3.2 million worth of costs to drill the upcoming well, it said.
If a discovery is made, Angus will make a deferred payment of GBP265,625 to Europa covering back costs plus a 25% uplift, Europa said.
"The company will participate in the drilling of the planned Holmwood-1 exploration well, which obtained planning consent during 2015, that will test the Holmwood prospect's identified Portlandian and Corallian sandstone reservoirs and the same Jurassic section that tested oil from Kimmeridge limestones at Horse Hill," said Angus.
The licence covering the nearby Horse Hill-1 well, nicknamed the 'Gatwick Gusher', abuts the Holmwood licence. A string of London-listed firms are part of the Horse Hill project, including UK Oil & Gas Investments, Solo Oil PLC, Regency Mines PLC, Alba Mineral Resources PLC, Gunsynd PLC and Stellar Resources PLC.
Notably, the licence containing the Brockham prospect - which Angus and Alba are both interested in - lies within both the Holmwood and Horse Hill areas.
Angus said it believes its net well costs for Holmwood-1 to be drilled in 2017 will be GBP800,000 funded through the funds raised in a GBP2 million placing launched on Monday, issuing 18.2 million new shares at 11 pence each.
In addition to funding drilling costs, Angus said the funds will also be used to complete the acquisition of a 10% interest in the Brockham oil field, which will push its total stake up to 65% once completed. Angus said this will cost roughly GBP300,000.
Funds may also be "potentially" used so it can exercise its option to buy a 10% stake in the Lidsey oil field, which would push the London-listed company's stake up to 60%.
"This option has not yet been exercised and a further announcement will be made should the company elect to do so," said Angus.
Europa shares were up 4.1% to 5.07 pence per share while Angus shares were down 7.4% to 12.85 pence per share.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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