Proactive Investors
The Morocco entry could be just the start of the companies expansion and diversification, though onshore UK and offshore Ireland remain important.
Europa Oil & Gas Holdings PLC (LON:EOG) chief executive Hugh Mackay used the explorer’s financial results for 2019 to highlight the plan for an ambitious growth strategy.
It comes after the company – which had previously centred its business on UK and Ireland assets – last month landed the Inezgane offshore project in Morocco, rounding off “an extensive process and considerable work”.
“Inzeghane does not represent the sum of our new venture activity,” Mackay said.
“Our aim is to build a full cycle oil and gas company and our priority is to add a late stage appraisal/development project to our licence base.
READ: Europa Oil & Gas expands footprint with Morocco acreage
“At the same time, we are working hard to advance our existing assets, specifically securing funding to drill wells offshore Ireland and supporting the operator’s efforts to obtain planning consent for the development of the Wressle oil field, which promises to more than double our UK onshore production to around 240bopd.”
The Europa chief, meanwhile, highlighted that the Wressle project going online would see the company’s revenue “leap to £3-4mln a year” – which, as he noted, would represent about half Europa’s current stock market value.
“Together with a low cost base, Europa would be transformed into a profitable oil and gas company, at least at the underlying level, with a prospect inventory that has significant company-making potential,” he said.
Inezghane – Morocco entry
Europa was award in September an eight-year licence for the Inezgane area, which spans some 11,228 square kilometres (it owns 75% of the asset, in partnership with the national energy company).
It is described as an ‘under-explored’ area though Europa highlighted that it has already identified the key elements required for a working hydrocarbon system – source, reservoir and seal – are all present.
Specifically, Europa said that a number of ‘large structural traps located on the edges and above salt diapirs’ throughout the licence area and it plans to mature several of these stacked prospects to drillable status.
Each has the potential to host upwards of 250mln barrels of crude, according to Europa.
The first phase of work at Inezgane will see the reprocessing of seismic data along with other technical desktop work. Europa must drill its first exploration well during the second two-year phase or it must otherwise relinquish the acreage.
Ireland OK
Europa noted the recent high-profile comments by the Irish government which announced an intent to phase out future licensing for oil exploration.
The company today said that Ireland will not include gas exploration in its proposed curtailment and that the government later confirmed that all existing exploration licences for both oil and gas remain valid.
Europa has in recent years built up a substantial potential resource base, counted in billion barrels, though it has yet to advance exploration drilling campaigns to prove and unlock these estimated barrels.
Farm-out partnering is a key part of Europa’s strategy to unearth its potential, though the priority has in recent times been on the Inishkea gas exploration assets which neighbour the Corrib gas project, which is Ireland’s biggest gas field and provides most of its domestic-sourced gas supplies.
Efforts to progress Inishkea has been frustrated by regulatory delay, which has caused a planned well site survey to likely take place in 2020 rather than the original plan to do it this year.
Looking forward, Europa said: “We believe that there is a compelling technical and commercial case for gas exploration in the vicinity of the Corrib gas infrastructure and there are positive signs for a farmout.”
Financial year
In the twelve years ended 31 July, Europa produced an average of 91 barrels oil equivalent per day from interests in three onshore UK fields.
It noted a pivotal upcoming decision date with the Wressle field’s planning appeal slated for 5 November and said that, subject to a positive outcome, it would expect development work to follow in order to more than double production volumes.
Group revenue was reported at £1.7mln, and, pre-tax losses narrowed to £700,000 for the year. The company managed a 16% reduction in admin expenses, which amounted to £811,000.
Europa ended July with some £2.9mln of cash.
