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(Alliance News) - Angus Energy PLC confirmed on Wednesday it has agreed to farm-in to a 51% stake in the Saltfleetby gas field in Lincolnshire.
Angus in late April had said it was conducting due diligence on an unnamed onshore gas field in the UK. Saltfleetby has been on and off production for the past 20 years, and the remaining 49% is owned by Wingas Storage (UK) Ltd, which will be renamed Salftleetby Energy.
As part of the deal, Saltfleetby Energy will pay Angus an initial GBP2.5 million, which Angus will either use to reconnect the field to the UK gas grid or for abandonment costs if reconnection is not commercially viable.
Angus believes reconnection is commercially feasible and believes work can be completed between May and August 2020.
Angus Managing Director George Lucan said: "As we obtain more precise detail on the field and the costs of either reconnecting or abandoning it, and taking into account the increased contribution from Saltfleetby Energy, we become more confident this is an excellent deal for the company in which Angus can supply the necessary high-quality expertise and low-cost production techniques to bring onshore gas to the UK national gas grid and value to our shareholders.
"This diversifies our asset base by geography and typology of hydrocarbon and reinforces our strategic shift from exploration into balanced exploration, development and production."
Saltfleetby was discovered in 1996, having first been explored during the 1980s. The field was put on stream in late 1999, producing gas from Early Westfalian sandstones.
Seismic mapping suggests 114 billion cubic feet of gas are in the field, with 67 billion cubic feet of dry gas having already been produced.
Angus shares were 2.4% lower on Wednesday at a price of 4.00 pence each.