Europa Oil to launch Irish farm-out in January

British explorer Europa Oil and Gas is hopeful of concluding a farm-out deal for its offshore Irish assets during the first half of next year.

Last month, the London company’s senior partner here, the Dallas-based Kosmos Energy, announced its intention to pull out of Ireland in favour of focusing on its African assets.

Kosmos holds an 85% stake in two licences in the South Porcupine Basin, off the coast of Co Kerry, with Europa controlling the remaining 15%.

Kosmos is expected to complete the process of returning its licences to the State by the end of this year.

It is anticipated that the Government will then transfer 100% ownership of the two licences to Europa, which will then need to find a new partner to develop the assets.

Speaking yesterday, following the conclusion of the Atlantic Ireland conference in Dublin, Europa’s chief executive, Hugh Mackay said his company, depending on things going to plan, will open the ‘data room’ on the Porcupine Basin assets in early January, with the hope of landing a partner before the end of June.

Europa would also look to retain at least a 15% stake in the existing assets.

The timing of Europa’s movements are also taking into account the recent licensing round, for acreage off the west coast.

The Government, last month, received 43 applications from 17 companies, with 80% for blocks in the Porcupine Basin. Europa has also applied for more acreage and could bundle whatever new awards it is granted in with its existing licences, as part of a farm-out offer.

Drilling for its existing Irish assets had been planned for 2017, prior to Kosmos’ decision. But, if Europa were to get a new partner by the middle of next year, such a drill date would technically still be feasible.

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“Our mission is to land a farm-in partner to share the costs of drilling and the target audience is major and mid-cap oil companies.

As a consequence of the drop in oil prices, day rates for state-of-the-art harsh-environment deepwater drilling rigs have halved. The next few years offer an opportunity to drill offshore Ireland at the lowest rig costs in over a decade,” Mr Mackay said.

Independent studies of one of Europa’s two existing Irish assets, FEL (frontier exploration licence) 3/13, suggests it holds gross resources of 1.5 billion barrels of oil equivalent and a 100% ownership would be worth $7bn.

While Europa still has assets in Britain and France, Mr Mackay said Ireland is, by far, the potentially transformative key for the company.

“We are encouraged by the high levels of participation in the 2015 Atlantic Margin Licensing Round, particularly given the low oil price. It would appear that many other companies share our belief in the technical and commercial case for exploration offshore Ireland.”