In December 2006 Star Energy Group plc ("Star Energy") agreed to farm-in to EnCore's 100% block 43/8 containing the depleted Forbes gas field to earn a 25% interest through undertaking a gas storage feasibility study. The farm-in was extended to include the Esmond field in block 43/13a and potentially the Gordon field in block 43/15a and 43/20a.
Currently EnCore's interest in the Esmond and Forbes field is 75%. Star Energy has an option to increase its interest in Forbes and Esmond to 50% on completion of the ongoing feasibility study. EnCore's recently announced farm-out of the Bennett prospect in blocks 43/15a and 43/20a did not include an interest in the overlying Gordon field where EnCore's interest remains at 100%. The Directors believe that work undertaken on the project to date suggests that there is potentially very significant value in the project.
Alan Booth, EnCore Oil's Chief Executive Officer, commented:
"Although EnCore is fundamentally an exploration and production company we identified potentially significant value in developing gas storage options for the depleted Esmond and Forbes gas reservoirs. We believe the market has yet to recognize the significant value already created in our gas storage project and this will be best achieved through a separately listed business.
The businesses have fundamentally different risk/reward profiles, as well as differing timescales and capital requirements. We believe today's announcement of an offer by Petronas for our partner Star Energy demonstrates the significant value already accrued to gas storage businesses, particularly offshore."
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