Island said yesterday it has reached an agreement with Marathon (the new owners of a majority stake in the Seven Heads) to look for gas in an area near the field.
Island said it will drill a well, as part of its three-well drilling programme, in April to test the possible extension of the Seven Heads gas field in an area to the west of an existing production well, which to date encountered some of the best producing gas sands in the field.
“Marathon has an unrivalled history of experience and expertise in producing gas from the Celtic Sea.
"Island provides complementary technical skills, in that it has, over the past two years, made significant progress towards developing and maturing ready for drilling its portfolio of exploration and appraisal projects in this area,” Island Oil & Gas chief executive Paul Griffiths said.
“This will help us to forge a positive and creative working relationship with Marathon.
“An example of this is the way the companies have cooperated to move quickly to begin to evaluate the potential upside in the Seven Heads gas field by executing an agreement that will facilitate new drilling on Seven Heads utilising the Petriola drilling rig, currently under contract to Island.”
The drilling will be funded by Island, in return for an increased stake in the field.
Shares in Island gained 4% yesterday on London’s Alternative Investment Market, to close at 85.5 pence (124 cents). They have risen by 60% in the past year.
Marathon last week bought a majority stake in the Seven Heads field for a knock-down price from Aberdeen-based Ramco.
The Seven Heads field has proved to be a disaster for Ramco. It sold out for just over 8 million, even though it pumped tens of millions into the development.
The field, about a third of the size of the nearby Kinsale gas project, saw production fall in 2004, as water was coming through the existing wells, reducing the gas extraction rate.
That forced Ramco to buy gas from other operators.
Marathon, which owns the Kinsale gas field, will operate the Seven Heads field and any new discoveries found by Island in the April drilling tests.