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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