Europa Oil & Gas (Holdings) PLC has decided not to pursue a bid it had submitted in the United Kingdom’s latest oil and gas licensing round even if awarded the rights, saying changes in fiscal and operating conditions surrounding the lease have rendered the area unfavorable.
The London-based exploration and production company issued the statement the same day the North Sea Transition Authority (NSTA) announced it had offered a further 31 licenses in the final phase of the UK’s 33rd oil and gas licensing round. The agency did not disclose the winning bidders.
In the statement, Europa said it had received a proposal from the NSTA of a “marriage” between Europa and another company for a license applied for in the 33rd round. “After careful consideration, the Company has decided not to accept the proposed marriage and it has also decided to notify the NSTA that, if the NSTA subsequently decide to award the License, in its entirety, to the Company as the sole owner, Europa would decline the offer”, Europa said.
“Europa spent some time during Q4 2022 [fourth quarter of 2022] analyzing the available sub-surface data, the monetization options and subsequent economics of a development of the resources within the License”, the company added. “Since this analysis, various aspects of the operating conditions and the fiscal environment have changed and remain uncertain, this has reduced the economic and strategic attractiveness of the License.
“As such, the Company believes that its resources are better deployed on its existing assets and looking for new opportunities within its core areas of focus”.
The UK’s 33rd licensing round opened for applications October 2022 and closed January 2023.
“Since making the application we have acquired an interest in the EG-08 license in Equatorial Guinea, which we believe is very material”, Europa chief executive Will Holland explained. The African asset is estimated to hold prospective resources of 1.4 trillion cubic feet of gas equivalent according to Europa, which became a participant through the acquisition of a 42.9 percent stake in EG08’s 80 percent owner Antler Global Ltd.
“Given the size of the Company and our limited resources it is essential that we focus on where we see the best risk/reward proposition that can generate significant value for our shareholders”, Holland added. “Any new asset needs to be considered carefully against other opportunities that are under evaluation to ensure that we are deploying our capital on assets that have the best potential of returning value to our shareholders”.
Europa reported GBP 4.8 million ($5.6 million) in current assets—assets convertible to cash within a year—as of the end of the first quarter of 2024, including GBP 2.7 million ($3.1 million) in cash and cash equivalents. Its current liabilities stood at GBP 3 million ($3.5 million), according to its quarterly financial report April 17.
With the latest licensing results, the NSTA has now offered 82 licenses out of 115 bids across 257 blocks and part-blocks under the 33rd round. Fifty out of 76 companies were named winners, according to the NSTA.
“The licenses offered in the round would be expected to add an estimated 600 mmboe [million barrels of oil equivalent] up to 2060, or 545 by 2050”, the NSTA said.
“The 31 offers in the final tranche are made up of 29 new licenses and two merges”, it added. “Of the 29 new licenses, 23 are Initial Term Phase A or B, two will be Initial Term Phase C (firm wells), and the remaining four will go straight to Second Term, meaning they can theoretically go into production more quickly.
“Phase A is a period for carrying out geotechnical studies and geophysical data reprocessing; Phase B is a period for undertaking seismic surveys and acquiring other geophysical data; and Phase C is for drilling”.
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