Under the farm out arrangements, Granby will earn a 10% interest in the license, with Granby's share of the cost of drilling and testing an exploration well on the Fraisthorpe prospect fully carried by Gas Plus. Gas Plus will earn a 35% interest in the license. Granby will provide Egdon, as license operator, with some technical assistance for the License on behalf of the joint venture.
The exploration well will be operated by Egdon and will target a Permian Leman Sandstone prospect at a depth of around 1,800 meters on the Fraisthorpe prospect which is located some 7 kilometers to the south of the Caythorpe gas field which produces from the same formation. A 2D seismic survey was acquired over the Fraisthorpe prospect in May 2005. A planning application is currently being prepared and, subject to planning approval and any operational constraints, the well is anticipated to be drilled in the fourth quarter of 2006 or in early 2007.
Assignment of the license interests to Granby and Gas Plus is subject to the approval of the Secretary of State for Trade & Industry.
David Grassick, Managing Director of Granby Oil and Gas, said:
'We are delighted with the outcome of this arrangement which gives Granby its first onshore venture, providing early drilling activity on a sizeable gas prospect for no cash outlay.'
Richard Moreton, Executive Director, said:
'This is an area known well to Granby, allowing the Group to contribute its relevant technical knowledge. We look forward to working with our new partners and hope for a very successful future joint venture together.'
Dr Marco Zanella, Managing Director of Gas Plus, said:
'We look forward to working with Egdon and our new partners to participate in a well to test a significant gas exploration prospect in a very interesting onshore area in the UK within a gas producing region of the UK onshore. We are also delighted to be working with Granby to participate in our second venture together in the UK.'
Following completion of the farmout arrangements and the assignment of interests in the license, the participating interests will be Egdon Resources with 25%; Sterling Resources (UK) Ltd. with 20%; Granby Enterprises with 10%; Gas Plus E&P UK Limited with 17.5%; Gas Plus O&G UK Limited with 17.5%; Sterling Energy Plc with 10%.
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