Irish explorer Fastnet Oil & Gas reported Thursday that it has extended its option agreement with Petronas subsidiary PSE Kinsale Energy to farm into the Deep Kinsale Prospectin the Celtic Sea. The prospect extends from 4,000 feet subsea below the producing Kinsale Head gas field.
The revised terms of the agreement include a commitment to commence drilling of a well before December 31, 2016. It also sees the deletion of the Kinsale Energy back-in option that had allowed Kinsale Energy to increase its interest in the Kinsale Deep Sub-Area by 10 percent by paying for 16.67 percent of the drilling and testing costs of the farm-in well. Meanwhile, it removes Kinsale Energy’s right to increase its working interest by up to 15 percent for no consideration if there is a commercial development.
Ultimately, upon completion of the farm-in deal, and including the 100-percent funding of all drilling and testing costs, Fastnet’s net equity interest shall be fixed at 60 percent working interest in the Deep Kinsale Sub-Area.
Fastnet Managing Director Paul Griffiths commented in a company statement:
"The new terms of the Deep Kinsale Prospect greatly improve the project economics and significantly improves materiality for Fastnet and any potential Farminee. The extension of the deadline to exercise the option and the commencement of a well works well with our timeline to complete a Farm-in transaction from our ongoing process.
“Fastnet has considerably advanced the technical understanding and de-risked the opportunity at Deep Kinsale based on our extensive interpretation of our newly acquired 3D seismic data (2013). Fastnet has progressed potential farm-in discussions with a number of industry players and we seek to close out a transaction with a potential drilling partner for Deep Kinsale and recover substantial past costs to further strengthen our already significant discretionary cash balances."
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