The deal covers the entire issued share capital of Island Netherlands BV (INBV).
The business being sold includes INBV’s 83.33% interest in the production licence, which contains the undeveloped Amstel Oil Field, and its 100% interest in the recently awarded Q13b Exploration Licence.
As part of the deal, Delta will advance Island $10m (€6.4m) in loans that will be repaid from royalties due to Island under the terms of the sale.
Proceeds from the sale will be used by Island to provide an injection of fresh working capital into the group.
The move will also allow the Irish exploration group to continue to evaluate its portfolio of domestic and international assets and to cut borrowings.
The injection of funds will also give the group the opportunity to create value for shareholders through licence farm out, asset sale and/or active exploration.
Island believes there is considerable potential for adding value through acquiring new licences in the Netherlands and is therefore actively considering new ground floor opportunities, the company said.
The deal also allows the group to pay off an existing £12m (€15m) RMB loan facility in full.
Island chief executive Paul Griffiths expressed satisfaction with the deal.
“Island is delighted to have secured this deal with Delta Hydrocarbons. We have achieved a significant uplift in value through the process of acquisition, development and subsequent sale,” he said.
Island has invested over two years in maturing the assets to a point where a significant return for shareholders has now been realised, he said.
“Additionally we retain the potential for future cash flow from production through our royalty arrangements with Delta and Encore.
“We are confident that Delta Hydrocarbons bring the necessary technical expertise and financial strength to accelerate the development of this important asset in order to provide cash flow at the earliest opportunity.”