Oilexco and Faroe Petroleum have commenced drilling a well at the Halibut prospect located in Blocks 14/21a and 14/22a in the UK Central North Sea. The well will be drilled by Dolphin Drilling's semisub Bredford Dolphin to an expected depth of approximately 4,500 feet. The primary objective targets Upper Jurassic Sandstones, with secondary targets in Lower Cretaceous Sandstones.
Oilexco is paying 80% of the drilling and historic survey costs to earn a 55% interest in the blocks, and will be designated the Operator if the well is successful. Faroe will pay the remaining 20% of costs to retain a 45% interest in the blocks. In the event that production occurs in the Halibut prospect, Oilexco and Faroe will pay a combined 10% royalty to Shell and ExxonMobil, (the previous owners of the blocks) once total production revenue from Halibut surpasses US$2 billion.
"We originally viewed the data for this prospect in 2003 and were impressed by the previous owners' technical evaluations, but the timing wasn't right for our company", said Oilexco President and CEO Arthur Millholland. "When Faroe approached us last year to participate in Halibut by bringing one of our contracted semi-submersibles we didn't hesitate. While this is the highest risk prospect in our portfolio for 2006, we're excited about it and look forward to working with the people at Faroe."
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