For their 35 percent stake in Block 1/2, Paladin Norway will pay Hydro 10 million Norwegian Kroner (ca £0.9 million), subject to adjustment for cash flows and interest from the effective date of 1st July 2002 until completion.
To date, there has been one oil discovery in Block 1/2 which confirmed the extension of the UKCS Blane Field into Norwegian waters. Further appraisal drilling is required to establish the reserve potential of this discovery and the distribution of reserves between the UK and Norway. Paladin anticipates that such drilling will occur in 2003-2004, subject to partner approval. Block 1/2 has, in addition, exploration prospects and leads identified at Tertiary, Jurassic and Triassic levels. In the event that an exploration well is drilled on this block within 3 years from the effective date, Hydro have the right to be reassigned a 15 percent interest in the block, excluding the Blane Field, at no cost. In the event that an exploration well is not drilled then Hydro have the right to be reassigned their entire 35 percent interest in the block, excluding the Blane Field.
To acquire a 20 percent interest in License 271,in which Hydro currently hold a 60 percent interest, Paladin Norway will pay 50 percent of the gross costs of a 3-D seismic survey over Block 7/1 up to a total maximum net cost of 30 million Norwegian Kroner (ca. £2.6 million).
This survey will be acquired during the third quarter of 2002 and will focus on a number of interesting leads at Tertiary, Jurassic and Triassic level. Given encouragement from the results of the 3-D seismic survey, an exploration well could be drilled in 2004.
Both deals are subject to the approval of joint venture partners and the Norwegian regulatory authorities. It is anticipated that completion will occur in the third quarter of 2002.
Roy Franklin, Chief Executive of Paladin, commented: 'This is a significant step forward in the development of our Norwegian business. We would hope to see early further appraisal of the Blane Field, and there are interesting exploration opportunities to be pursued in Block 1/2 and in Block 7/1- an ideal complement to our existing Norwegian production.'
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