EnCore Oil has acquired interests in two gas discoveries offshore Ireland and one oil field offshore Netherlands, as a result of its cooperation agreement with Island Oil & Gas. The agreement gives EnCore additional 2007 drilling activity as well as potential near term production in two new jurisdictions.
The immediate cash cost to EnCore will be £3.1 million, of which £2 million will be met by the sum already on deposit with Island. In addition, Island has acquired options to take 15 percent of EnCore's equity in the Bennett Carboniferous prospect within UK licence Block 43/15a, and 30 percent of EnCore's equity in the Nimes permit application onshore France, subject to certain conditions.
The new interests include:
- 15 percent equity in part-block 49/23 offshore Ireland, which contains the Old Head of Kinsale gas discovery, drilled by Island in 2006. The gas discovery is located 25 kilometers from Marathon Oil's gas production facilities at the Kinsale Field. Island suspended the discovery as a potential gas producer pending drilling an appraisal well in 2007, which is currently expected to commence in mid-May. Old Head of Kinsale has gross contingent resources of 55 bcf. EnCore also has an option to acquire an additional five percent, subject to certain conditions.
- 12.5 percent equity in blocks 57/1 and 57/2, which contain the Schull Gas Field and a number of associated structures, discovered by Total in 1987. Schull lies approximately 43 kilometers to the southwest of the Seven Heads gas field and the associated infrastructure linking Seven Heads to the Kinsale Alpha platform. Schull has gross contingent resources of 18.2 bcf, and the other two gas prospects contain unrisked gross prospective resources of 74.1 bcf. Island will drill an appraisal well on Schull immediately after the Old Head well. EnCore also has an option to acquire an additional 7.5 percent, subject to certain conditions.
- 10 percent equity in the Q13 Production Licence, which covers an area of 30 square kilometers offshore the Netherlands and contains the Amstel Field, a Lower Cretaceous field with gross contingent resources of 10.9 million barrels. The field which was discovered in 1962 is located within the West Netherlands Basin and development is expected to commence in 2008. EnCore also has an option to acquire an additional five percent, subject to certain conditions.
Drilling is expected to commence in May of this year with an appraisal/ development well on Island's 2006 'Old Head' discovery using the Petrolia Semi-Submersible. This will be followed by a well on the Schull licence following up additional gas potential of Total's 1987 gas discovery. In 2008, EnCore expect to drill three development wells on the Amstel field in the Netherlands again subject to the necessary regulatory approvals.
The option agreement with Island to acquire up to 20 percent in the Connemara Licence has been extended until June 30, 2007.
Alan Booth, Chief Executive Officer of EnCore commented:
"Our entry into Ireland and The Netherlands is a significant and welcome addition to our portfolio. These additional five wells add to an already active program of drilling and commercial activity for EnCore over the next two years."
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