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LONDON (Alliance News) - Baron Oil PLC, Reabold Resources PLC and Upland Resources Ltd on Wednesday signed authorisation for expenditures for the Wick well, located in the North Sea.
Meanwhile, Baron Oil, Reabold and United Oil & Gas PLC also have signed the same authorisation for the Colter well in southern England.
Reabold has exposure to each of these wells via its 33% holding in oil & gas company Corallian Energy Ltd, which is the operator of PEDL 1918 licence - containing the Colter prospect- and holds a 45% interest. Corfe Energy, United Oil & Gas, and Baron Oil hold 40%, 10%, and 5% stakes in PEDL 1918, respectively.
In November last year, an Upland Resources subsidiary signed a farm-in agreement with Corallian for a 40% working interest in UK seaward production licence P2235 containing the Wick prospect.
In February, Baron Oil entered into an option agreement with Corfe Energy to be assigned part of its rights to farm into UK North Sea license P2235. As a result, Baron Oil holds 15% working interest in Wick prospect.
For the Wick well, current estimated drilling costs are around GBP5.7 million on a dry-hole basis. Baron Oil said it will cover GBP1.1 million of these costs, while the Upland subsidiary, Upland Resources UK Onshore Ltd, will contribute GBP2.8 million.
Upland Resources UK Onshore plans to fund 53% of the costs related to the Wick well, capped on a pro-rata basis at a gross cost of GBP4.2 million, with the incremental costs above this cap funded by Upland at 40%.
In turn, Baron Oil said it intends to fund 20% of the costs related to the Wick well, also capped on a pro-rata basis at a gross cost of GBP4.2 million, with the incremental costs above this cap funded by the company at 15%.
Turning to Colter well, Baron Oil said it agreed to increase its working interest in the P1918 licence to 8%. Under the amended contract, the company said it will fund 11% of the costs related to the Colter well, capped on a pro-rata basis at a gross cost of GBP8.0 million, including about half a million pounds of back costs. Any incremental costs above this cap will be funded by Baron Oil at 8%.
United Oil & Gas said it will cover a total gross cost of GBP7.5 million for Colter well drilling, taking its total estimated contribution toward that total cost to GBP1.0 million.
Subject to final regulatory approvals, the Wick well is expected to be drilled in September, with the Colter well following in the fourth quarter of 2018, Reabold said.
Baron Oil shares were trading flat Wednesday, Reabold Resources shares were down 2.3%, Upland Resources down 2.8%, and United Oil & Gas down 4.5%.