Upland Resources today confirmed its buy-in to a North Sea prospect.
The oil firm signed a farm-in agreement with Corallian Energy Limited for a 40% working interest in UK Seaward Production Licence P2235 containing the Wick Prospect.
The large Wick Prospect lies in the Inner Moray Firth, only 2km from land and in shallow water. The company estimates the Wick Prospect could hold in-place P50 resources of around 250 MMbbl.
Chief executive Steve Staley said: “I am delighted to announce this deal, which will (subject to completion) move the Company into the second phase of our strategy. The Wick Prospect and other potential targets within P2235 could host large volumes of hydrocarbons which, with near term drilling, gives Upland a clear pathway to potentially transformative value growth.
“We have taken our time in assessing this opportunity, in particular to gain a good understanding of the key fault risk in the Wick Prospect, before making an investment decision. This, alongside the continued cost pressures within the rig market, therefore presents us with a very exciting opportunity.
“I look forward to updating shareholders as to our progress towards exploratory drilling on Wick in due course.”
The prospect represents “a relatively low risk, low cost, potentially transformative near term drilling opportunity” for Upland, using a jack-up rig in late 2018. Corallian has already begun environmental permitting for the well.
Upland continues to interpret the data and believes additional, attractive prospects are likely to be found in the permit area.
Upland UK is likely to hold the largest interest in the P2235 Licence and be the only co-venturer that is part of a listed entity. The company will pay 53.33% of the first £4.2 million of costs related to the environmental survey and the first Wick well; costs above that cap will be funded pro rata to interests in the licence. The Wick well is currently estimated to have a total dry-hole cost of about £4.2 million.
Completion of the P2235 Farm-in Agreement is conditional on, inter alia, the approval by the UK Oil & Gas Authority of Upland UK as a farminee to the Licence, availability of funding to Upland UK sufficient to satisfy its obligations under the P2235 Farm-in Agreement and the Licence continuing in full force and effect.