Valiant Inks LOI to Purchase Nor UK, Increases Stake in Causeway Field

Causeway Field
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Valiant Petroleum plc has signed a letter of intent to sign a sale and purchase agreement with Nor Energy AS to acquire Nor Energy (UK) Limited, including a 10.50% interest in License P.201, Block 211/22a SE and License P.1383, Block 211/23d containing the Causeway Field. Valiant has agreed to discharge a $3 million loan between Nor UK and Nor at completion of the Nor UK acquisition and to pay a further $2 million deferred, contingent consideration after the Causeway Field has achieved first oil. As part of the transaction Valiant will immediately acquire potential UK tax losses estimated to be $20 million, which it anticipates it will be able to offset against future profit from production across its portfolio. Following completion of the transaction, Valiant will hold a 24.50% stake in the Causeway Field.

The Field Development Plan for Phase I of the Causeway Field development was submitted in December 2008 by the Operator, Antrim Energy Inc. Phase 1 is forecast to initially produce 15,000 bopd, accessing approximately 7.3 million barrels oil (gross) from the East Causeway area. Subsequent phases are anticipated to access additional reserves in the Central and Western areas of the Causeway Field. Approval of the Causeway Field FDP is anticipated during 2009.

Completion of the transaction is subject to various conditions precedent, including completion of the pending transfer of the Causeway Field between Nor and Nor UK and all requisite regulatory consents.

Peter Buchanan, Valiant's CEO, commented on the Nor acquisition: "The acquisition of Nor Energy (UK) gives Valiant a more meaningful stake in the Causeway Field, and we look forward to continuing to work with the field partners to ensure the timely delivery of this development in our core Northern North Sea area."

Causeway Field Development

According to Antrim Energy, the FDP plans production through a subsea tie-back to the Dunlin platform. This is the first phase of what is anticipated to be several phases of development of the field. Phase I is anticipated to initially produce 15,000 bopd, accessing approximately 7.3 million barrels oil (net 4.8 million) from the East Causeway area. Subsequent phases will access additional reserves in the Central and Western areas of the Causeway Field.

Phase I will involve the subsea completion and tie-back of one producer and one pressure maintenance well. The production well, 211/23d-17z, previously tested up to 14,500 bopd of light oil (32 degrees API) from two test intervals totaling 230 ft within a 1,177 ft net pay interval (measured depth). This well also penetrated an additional section in an adjacent fault block which tested up to 8,100 bopd from a previously drilled well. Well 211/23d-18 will serve as the pressure maintenance well, with a second production well anticipated one year after first production. The production and injection wells will be tied-back 9km subsea to the Dunlin processing facilities to allow crude oil delivery to the Sullom Voe Terminal through the Brent Pipeline System. The design includes provision for expansion for the further development phases.


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