Europa Oil & Gas (Holdings) Plc Sale of Interest in Wressle Discovery to Upland

 
TIDMEOG 
 
Europa Oil & Gas (Holdings) plc / Index: AIM / Epic: EOG / Sector: Oil & Gas 
 
24 November 2016 
 
          Europa Oil & Gas (Holdings) plc ('Europa' or 'the Company') 
 
           Sale of Interest in Wressle Discovery to Upland Resources 
 
Europa Oil & Gas (Holdings) plc, the UK & Ireland focussed oil and gas 
exploration, development and production company, is pleased to announce that 
its wholly owned subsidiary has signed a Sale and Purchase Agreement ("SPA") in 
relation to a 10% interest in Europa's PEDL180 and PEDL182 ('the Licences') in 
North Lincolnshire with Upland Resources (UK Onshore) Limited ("Upland").  The 
Licences cover the Wressle discovery (PEDL180) and the Broughton North prospect 
(PEDL182). 
 
·    Upland to acquire a 10% working interest in the Licences from Europa for a 
consideration of GBP1.85 million comprising an initial consideration of GBP1.6 
million and a contingent consideration of GBP0.25 million. 
 
·    The initial consideration will be met via a  payment of GBP1.3 million in 
cash and the issue to Europa of 23,076,923 new ordinary Upland Resources 
Limited shares ("Upland Shares") to the value of GBP0.3m (at the issue price of 
1.3p per share). 
 
·    The contingent consideration is subject to certain production milestones 
being met by June 2025 and will be met by the issue of 19,230,769 new ordinary 
Upland Shares to the value of GBP0.25m (at the issue price of 1.3p per share). 
 
·    Completion of the SPA is conditional upon inter alia approval from the Oil 
& Gas Authority and approval of the Wressle Field Development Plan 
 
·    Wressle is anticipated to commence production at a gross rate of 500 bopd 
in early 2017 
 
·    Post completion of the transaction, Europa's anticipated net 100 bopd from 
Wressle combined with existing UK onshore production is expected to increase 
the Company's overall production to around 220 bopd 
 
·    At 220 bopd it is expected that Europa will have a positive cash flow from 
operating activities at oil prices above US$30 per barrel. 
 
Europa CEO Hugh Mackay said, "Europa is delivering on its strategy to actively 
manage its portfolio and realise value for shareholders. So far this year we 
have farmed out part of our interest in PEDL143 (Holmwood) to Union Jack Oil; 
consolidated our position at PEDL299 (Hardstoft) through deals with Shale 
Petroleum and Upland; acquired an increased interest in PEDL346 (Cloughton) 
from Shale Petroleum; and sold portions of our interest in PEDL180/182 
(Wressle) to Union Jack Oil and now Upland. The GBP1.3 million cash consideration 
from this transaction together with the GBP0.6 million cash consideration 
received from the previous sale of Wressle to Union Jack will be used to fund 
ongoing exploration in the UK and Ireland including drilling the Holmwood well 
during 2017, which we rate as one of the best undrilled conventional prospects 
onshore UK. Following this transaction we value our remaining 20% interest in 
Wressle at GBP3.7 million. 
 
"Europa holds a portfolio of high quality exploration licences in both onshore 
UK and offshore Ireland.  We continue to advance and monetise our multistage 
portfolio of licences, and in the process generate value for our shareholders. 
It is public knowledge that we are in the process of farming out in Ireland 
where any one of our seven licences and licensing options has the potential to 
be a company maker for Europa. Whilst we do not provide running commentaries on 
farmout activity the market should feel assured that we are talking to the 
right parties and seeing strong interest. The recent series of transactions in 
the UK demonstrates that we are both active in the market and capable of 
closing deals on attractive terms." 
 
Terms of the SPA 
 
Under the term of the SPA, Upland will acquire a 10% working interest in the 
Licences from Europa Oil & Gas Limited, a wholly owned subsidiary of Europa, 
for a total initial consideration of GBP1.6 million and a contingent 
consideration of GBP0.25 million.  The initial consideration will be satisfied 
through the immediate payment of GBP160,000 in cash, a further GBP1.14 million cash 
and GBP0.3 million in new Upland Shares (at a price of 1.3p per new Upland Share) 
is to be received on completion. Completion of the SPA is conditional inter 
alia upon approval from the Oil & Gas Authority and approval of the Wressle 
Field Development Plan. 
 
Contingent on certain production milestones being met by June 2025, Europa will 
be issued a further GBP0.25 million in new Upland Shares, giving total 
consideration of GBP1.85 million. 
 
Europa can elect to dispose of the Upland Shares following the later of six 
months from completion of the transaction and the date of first export of oil 
from the Wressle site (subject to a long-stop date of 1 September 2017). 
 
Europa will retain a 20% interest in the Licences alongside Egdon Resources UK 
Limited (25%), Celtique Energie Petroleum Limited (33.33%), Union Jack Oil plc 
(11.67%) and Upland Resources (UK Onshore) Limited (10%). 
 
Europa's Net Interests 
 
Europa's post completion share of the Licences' 2P proved reserves is 0.13 
mmboe, 2C contingent resources is 0.37 mmboe and net mean un-risked prospective 
resources is 0.2 mmobe (based on a Competent Persons Report compiled by ERC 
Equipoise Limited ('ERCE') on 26 September 2016). 
 
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                    Net Volumes 
                                       Volumes                  attributable 
                                                                  to Europa 
                                                                   before 
                                                                 transaction 
 
                                 Oil     Gas    Oil and   Oil        Gas      Oil and 
                                MMstb    Bscf     Gas*   MMstb      Bscf        Gas* 
                                                 MMboe                         MMboe 
 
Wressle 
2P Ashover Grit  and Wingfield  0.62     0.20     0.65    0.21      0.07        0.22 
Flags 
 
2C Penistone Flags              1.53     2.00     1.86    0.51      0.67        0.62 
 
Broughton North 
Mean Unrisked  Prospective      0.51     0.51     0.60    0.17      0.17        0.20 
Resources 
 
 
 
                                        Gross                    Net Volumes 
                                       Volumes                  attributable 
                                                                  to Europa 
                                                                    after 
                                                                 transaction 
 
                                 Oil     Gas    Oil and   Oil        Gas      Oil and 
                                MMstb    Bscf     Gas*   MMstb      Bscf        Gas* 
                                                 MMboe                         MMboe 
 
Wressle 
2P Ashover Grit  and Wingfield  0.62     0.20     0.65   0.124      0.04        0.13 
Flags 
 
2C Penistone Flags              1.53     2.00     1.86   0.301      0.40        0.37 
 
Broughton North 
Mean Unrisked  Prospective      0.51     0.51     0.60    0.10      0.10        0.12 
Resources 
 
*Gas converted to oil equivalent using 6 Bscf/MMboe conversion and added to oil 
volume 
 
This announcement contains inside information for the purposes of Article 7 of 
Regulation (EU) No 596/2014. 
 
                                 * *S * * 
 
For further information please visit 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 2016 Europa produced 123 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 
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. 
 
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. 
 
 
 
END 
 

(END) Dow Jones Newswires

November 24, 2016 08:28 ET (13:28 GMT)