Cluff Signs Acquisition Agreement with Verus for North Sea Licenses
Cluff Natural Resources plc has signed an agreement with Verus Petroleum (CNS) Limited and Verus Petroleum (SNS) Limited to acquire up to a 25 percent participating interest in three licenses located in the Central North Sea and the Moray Firth.
As part of the deal, Cluff proposes initially to acquire a 5 percent non-operated interest in UK Continental Shelf licenses P1944 and P2156 located in the Outer Moray Firth, which contain the Fynn and Penny exploration prospects. The agreement provides an exclusive option which allows Cluff to increase its equity position in licenses P1944 and P2156 by 20 percent to 25 percent within a period of nine months following execution of the sale and purchase agreement for the acquisition of the initial 5 percent interest.
The agreement also provides an exclusive option to acquire, within the same nine month period, a 25 percent interest in Licence P2082, which is located in the Central North Sea and contains the Skerryvore exploration prospect. All three licenses are operated by The Parkmead Group, which estimates the potential for 400 million barrels of recoverable oil in aggregate. The consideration for the proposed acquisition and for the option agreements shall be GBP 1 ($1.42) each, with the economic date being January 1, 2016.
The Skerryvore and Fynn prospects are effectively drill ready, according to Cluff, which expects that a well on each prospect will be drilled within the next 12 to 24 months “to take advantage of the lower cost operating environment which currently persists in the UKCS”.
Commenting on the acquisition agreement, Cluff’s Chairman and Chief Executive Algy Cluff said in a company statement:
“We are delighted to have been able to take advantage of the current circumstances in the North Sea which have seen a number of very high quality exploration and appraisal assets become available at low or even no cost. These proposed acquisitions complement our existing five licenses in the Southern North Sea which demonstrated significant gas potential and represent the first steps to creating a diversified portfolio of exploration and appraisal assets. Our objective now is to complete the acquisition process and begin working with our new partners to fully appraise the significant production potential of these exciting assets.”
Oil and gas analysts at Panmure Gordon & Co stated that Cluff’s proposed acquisition is “in line with its strategy of taking advantage of current depressed industry conditions to pick up prospective licenses at low cost” but warned that the deal still remained “subject to a number of conditions, including government approval.”
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