EUROPA OIL & GAS (HOLDINGS) PLC - Sale of Interest in Wressle Discovery

Europa Oil & Gas (Holdings) plc / Index: AIM / Epic: EOG / Sector: Oil & Gas

27 September 2016

Europa Oil & Gas (Holdings) plc (‘Europa’ or ‘the Company’)

Sale of Interest in Wressle Discovery

Europa Oil & Gas (Holdings) plc, the AIM traded oil and gas exploration, development and production company focused on Europe, is pleased to announce it has signed a Sale and Purchase Agreement (`SPA') in relation to its 33.34% interest in PEDL180 and PEDL182 (‘the Licences’) in North Lincolnshire with Union Jack Oil plc (‘UJO’).  The Licences cover the Wressle discovery (PEDL180) and the Broughton North prospect (PEDL182).

• Under the terms of the SPA, UJO will acquire a 3.34% working interest in the Licences from Europa for a cash consideration of £600,000
• The transaction implies a £5.4 million mark to market for Europa’s remaining 30% interest in the Licences

• Wressle is anticipated to commence production at a gross rate of 500 bopd in early 2017
• Europa’s anticipated net share of 150 bopd from Wressle is expected to more than double existing production from the West Firsby and Crosby Warren fields and Whisby-4 well
• Summary details of a Competent Persons Report compiled by ERC Equipoise Limited (‘ERCE’) were published by Europa and its partners in respect of Wressle and the Broughton North Prospect on 26 September 2016
• Subject to approval of the assignment of interest from the Oil & Gas Authority, Europa will retain a 30.00% interest in the Licences alongside Egdon Resources UK Limited (25.00%), Celtique Energie Petroleum Limited (33.33%) and Union Jack Oil plc (11.67%)

Europa CEO Hugh Mackay said, “We consider this transaction to represent a sensible monetisation of part of the asset now it has been largely de-risked, whilst still retaining sizeable exposure to production and upside on the other reservoirs.  Importantly, this transaction provides investors with a point of reference for the value of our remaining 30% interest in the Licences.  At £5.4 million our 30% interest in these two licences accounts for almost half our current market capitalisation.

“PEDL180 and 182 are just two of a portfolio of licences we hold.  These include three UK onshore fields which in H1 produced 124 boepd net to Europa; PEDL143 containing the Holmwood prospect in the Weald Basin, which we rate as the best undrilled conventional prospect onshore UK; and seven licences offshore Ireland which we estimate to have gross mean un-risked prospective and indicative resources of more than 4 billion barrels of oil equivalent and 1.5 tcf of gas.   The funds released will be used to fund our share of drilling the Holmwood exploration well in PEDL143, which we anticipate drilling in 2017 subject to obtaining the relevant permits and permissions. In the meantime, we continue with our strategy to advance and monetise our multistage portfolio of licences, and in the process generate value for our shareholders.”

Europa’s net interests following this transaction are tabulated below:

Table summarising gross volumes at Wressle and Broughton North along with net volumes attributed to Europa’s interests before and after transaction

		Gross Volumes			Net Volumes attributable to Europa before transaction
	Oil MMstb	Gas Bscf	Oil and Gas* MMboe	Oil MMstb	Gas     Bscf	Oil and Gas* MMboe
Wressle 2P Ashover Grit  and Wingfield Flags	0.62	0.20	0.65	0.21	0.07	0.22
2C Penistone Flags	1.53	2.00	1.86	0.51	0.67	0.62
Broughton North Mean Unrisked  Prospective Resources	0.51	0.51	0.60	0.17	0.17	0.20

   

		Gross Volumes			Net Volumes attributable to Europa after transaction
	Oil MMstb	Gas Bscf	Oil and Gas* MMboe	Oil MMstb	Gas     Bscf	Oil and Gas* MMboe
Wressle 2P Ashover Grit  and Wingfield Flags	0.62	0.20	0.65	0.19	0.06	0.20
2C Penistone Flags	1.53	2.00	1.86	0.46	0.60	0.56
Broughton North Mean Unrisked  Prospective Resources	0.51	0.51	0.60	0.15	0.15	0.18

*Gas converted to oil equivalent using 6 Bscf/MMboe conversion and added to oil volume

Glossary:

Some of the terms used in this announcement are defined below. A more exhaustive glossary is contained in ERCE’s letter to Europa’s Board of Directors summarising the findings of their CPR has been published on the Company’s website (www.europaoil.com).

Proved Reserves

Proved  Reserves  are  those  quantities  of  petroleum,  which  by  analysis  of  geoscience  and  engineering data,  can  be  estimated  with  reasonable certainty  to  be  commercially  recoverable,  from  a  given  date forward,  from  known  reservoirs  and  under  defined  economic  conditions,  operating  methods,  and government regulations.

If deterministic methods are used, the term reasonable certainty is intended to express a high degree of confidence that the quantities will be recovered.  If probabilistic methods are used, there should be at least a 90% probability that the quantities actually recovered will equal or exceed the estimate. The area of the reservoir considered as Proved includes:

• the  area  delineated  by  drilling  and  defined  by  fluid  contacts,  if  any,  and
• adjacent  undrilled  portions  of  the  reservoir  that  can  reasonably  be  judged  as  continuous with  it  and  commercially  productive  on  the  basis  of  available  geoscience  and  engineering data

In the absence of data on fluid contacts, Proved quantities in a reservoir are limited by the lowest known hydrocarbon  (LKH)  as  seen  in  a  well  penetration  unless  otherwise  indicated  by  definitive  geoscience, engineering,  or  performance  data.  Such definitive  information  may  include  pressure  gradient  analysis and  seismic  indicators.  Seismic  data  alone  may  not  be  sufficient  to  define  fluid  contacts  for  Proved Reserves  (see  “2001  Supplemental  Guidelines,”  Chapter  8).  Reserves  in  undeveloped  locations  may  be classified as Proved provided that the locations are in undrilled areas of the reservoir that can be judged with reasonable certainty to be commercially productive and interpretations of available geoscience and engineering  data  indicate  with  reasonable  certainty  that  the  objective  formation  is  laterally  continuous with drilled Proved locations.  For  Proved  Reserves,  the  recovery  efficiency  applied  to  these  reservoirs  should  be  defined  based  on  a range  of  possibilities  supported  by  analogues  and  sound  engineering  judgment  considering  the characteristics of the Proved area and the applied development programme.

2P 

Proved + Probable, a best estimate category of Reserves.

Contingent Resources 

Contingent  Resources  are  those  quantities  of  petroleum  estimated,  as  of  a  given  date,  to  be  potentially recoverable  from  known  accumulations  by  application  of  development  projects,  but  which  are  not currently considered to be commercially recoverable due to one or more contingencies.

Contingent  Resources  may  include,  for  example,  projects  for which  there  are  currently  no  viable markets,  or  where  commercial  recovery  is  dependent  on  technology  under  development,  or  where evaluation  of  the  accumulation  is  insufficient  to  clearly  assess  commerciality.  Contingent  Resources  are further  categorized  in  accordance  with  the  level  of  certainty  associated  with  the  estimates  and  may  be sub?classified based on project maturity and/or characterized by their economic status.

2C 

A best estimate category of Contingent Resources.

Prospective Resources 

Prospective  Resources  are  those  quantities  of  petroleum   which  are  estimated,  as  of  a  given  date,  to  be potentially recoverable from undiscovered accumulations. Potential accumulations are evaluated according to their chance of discovery and, assuming a discovery, the  estimated  quantities  that  would  be  recoverable  under  defined  development  projects.  It  is recognized  that  the  development  programs  will  be  of significantly  less  detail  and  depend  more  heavily on analog developments in the earlier phases of exploration.

* * ENDS * *

For further information please visit http://www.europaoil.com/ or contact:

Hugh Mackay	Europa	+ 44 (0) 20 7224 3770
Phil Greenhalgh	Europa	+ 44 (0) 20 7224 3770
Matt Goode	finnCap Ltd	+ 44 (0) 20 7220 0500
Simon Hicks	finnCap Ltd	+ 44 (0) 20 7220 0500
Frank Buhagiar	St Brides Partners Ltd	+ 44 (0) 20 7236 1177
Susie Geliher	St Brides Partners Ltd	+ 44 (0) 20 7236 1177

Notes

Europa Oil & Gas (Holdings) plc has a diversified portfolio of multi-stage hydrocarbon assets that includes production, exploration and development interests, in countries that are politically stable, have transparent licensing processes, and offer attractive terms.  In H1 2016 Europa produced 124 boepd.  Its highly prospective exploration projects include the Wressle development (targeting production start-up in early 2017 at up to 500 bopd gross) in the UK; 100% owned gas exploration prospect (107 bcf) and appraisal project (CPR 277 bcf) in onshore France, a joint venture with Vermilion Energy also in onshore France; and seven licences offshore Ireland with the potential to host gross mean un-risked prospective and indicative resources of more than 4 billion barrels oil equivalent and 1.5 tcf gas across all seven licences.

Qualified Person Review

This release has been reviewed by Hugh Mackay, Chief Executive of Europa, who is a petroleum geologist with 30 years' experience in petroleum exploration and a member of the Petroleum Exploration Society of Great Britain, American Association of Petroleum Geologists and Fellow of the Geological Society. Mr Mackay has consented to the inclusion of the technical information in this release in the form and context in which it appears.

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