DECC Waves 'Drill-Or-Drop' Commitment for Elixir's UK North Sea Block
Elixir announced that the UK Department of Environment and Climate Change ("DECC") has agreed to waive the "drill-or-drop" decision commitment date on Block 211/18b (License P.1381).
The License was granted in late 2005 for an initial four year term, with a drill-or-drop decision required to be made by the end of the third year of the License term. If the well commitment was not made, the License would be relinquished at that point. If a well commitment was made, the well was required to be spudded prior to the end of the License term (being December 21, 2009).
As previously announced, the drill-or-drop decision date was extended by agreement with DECC to April 21, 2009. DECC has now agreed to waive the drill-or-drop commitment altogether. This means that a well is required to be spudded prior to December 21, 2009 in
order to retain the License, and if this does not occur, the License will be relinquished at that date.
The License, which is located in the northern sector of the UK North Sea, contains the Leopard Prospect, one of the largest remaining undrilled oil targets in the North Sea, with a mean prospective resource estimate of approximately 350 million barrels.
Commenting on the announcement, Elixir's Managing Director, Andrew Ross said, "The granting of a waiver of the drill-or-drop decision date is a welcome development for Elixir and we appreciate the commercial approach that has been adopted by DECC in this matter. The waiver will allow us to continue the detailed discussions we currently have on foot with several interested parties with a view to securing a further partner to participate in the drilling of the Leopard Prospect."
Ross also said, "Our renewed marketing efforts have been met with interest from a number of industry participants. Despite a marked softening in appetite for UKCS exploration witnessed in late 2008 and into early 2009, there now appears to be a growing appetite from those companies who are inclined to take the longer view and wish to participate in attractive prospects on reasonable terms and to also take advantage of unutilized rig capacity in the North Sea."
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