EnCore and Century Strike Asset Exchange Deal
EnCore Oil plc ("EnCore") on Monday entered into an Asset Exchange Agreement ("Agreement") with Century Exploration (UK) Limited ("Century"). The Agreement will give EnCore access to additional near term exploration drilling in the UK Southern Gas Basin as well as an additional license interest in Quadrant 9. In return, EnCore has agreed to assign 10% of its current 25% interest in blocks 18/5 & 19/1a to Century. EnCore will retain a 15% carried interest in Blocks 18/5 and 19/1a, where well 18/5-G is expected to be drilled towards the end of the year.
Under the Agreement, EnCore will receive from Century an 8.3125% free carried interest through drilling on Block 48/22b (Northern Area) adjacent to the Perenco-operated Waveney field. The carried well is planned to be drilled on the Cirrus prospect by the block operator Perenco in 2007. The well will consist of an initial pilot hole to test a potential gas bearing structure situated between the Waveney Gas Field and the existing 48/22-4 Gas Discovery. In the event that the initial pilot hole confirms the presence of a gas accumulation, it is planned to drill a sidetrack horizontal well bore as a potential producer, tied back to the adjacent Perenco-operated Waveney infrastructure. Agreement has also been reached on the general principles under which the Waveney facilities will be made available for gas production from 48/22b (Northern Area).
In addition, EnCore will acquire a 10% interest in block 9/27a situated immediately west of the Cragganmore Oil field. EnCore believes the block holds a number of interesting exploration leads, which are planned to be evaluated further with co-venturers Century and Granby Oil & Gas. This block is subject to an existing Overriding Royalty Interest agreement equivalent to 0.275% net to EnCore's 10.00% equity interest.
The asset exchange is subject to the usual regulatory consents.
Alan Booth, EnCore's Chief Executive Officer, said:
"We are especially pleased to be acquiring an interest in the Cirrus prospect, which we expect to be drilled in 2007. We believe Cirrus offers a relatively low risk opportunity, which would lead to near term production and associated cash flow in the event of success.
"This exchange agreement with Century Exploration, our agreement with Island Oil
& Gas, and our recently announced acquisitions are part of the ongoing process
to balance and broaden our opportunity portfolio. EnCore now has exposure to
three near term offshore exploration wells, two of which are at no cost to
EnCore at levels of ownership and risk that we believe are consistent with our
stated strategy. We now look forward to the anticipated announcement of the UK
24th Licensing Round in mid-November."
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