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(Alliance News) - Deltic Energy PLC on Thursday said it has farmed out five gas licences to Cairn Energy PLC.
Deltic is a London-based oil and gas explorer with assets in the UK North Sea. Edinburgh-based Cairn is a multinational explorer and developer listed in the FTSE 250 index.
Cairn will buy a 60% interest in each of two licences, and 70% each for the other three licenses. As part of the deal, Cairn will fund 100% of an agreed work programme and operate each licence, up to the point of deciding whether to drill, or give up, the assets.
In return, Cairn will pay Deltic USD1 million up-front, and fund 70% of the costs for either of two of the licences - up to a maximum USD25 million - if they decide to drill.
Shares in Deltic were up 6.6% to 2.13 pence in London on Thursday morning. Cairn was up 2.0% to 181.40 pence.
The farm-out deal is conditional on the two companies entering a joint operating agreement and getting regulatory approval.
"This agreement represents the commencement of a wide-ranging partnership with Cairn, whose successful history of opening up new basins is aligned with our exploration-focused strategy," Deltic Chief Executive Graham Swindells said.
By Ivan Edwards; ivanedwards@alliancenews.com
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