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(Sharecast News) - UK and Ireland-focussed oil and gas exploration, development and production company Europa Oil & Gas Holdings has been awarded a new Exploration Permit - the Inezgane Offshore Permit - covering an area of 11,228 square kilometres in the Agadir Basin, offshore Morocco, it announced on Wednesday.
The AIM-traded firm said a formal letter of award from the Office National des Hydrocarbures et des Mines (ONHYM) was expected shortly and, following confirmation of its acceptance, Europa would be assigned a 75% interest in, and operatorship of, the licence with ONHYM holding the remaining 25% interest.
Europa said its focus in the Inezgane Permit was on the Lower Cretaceous fan sand play, which it described as a "prolific producer" in West Africa.
The company said it had identified that the key elements required for a working hydrocarbon system - namely source, reservoir and seal - were all present in the licence area.
In addition, a number of large structural traps located on the edges and above salt diapirs had already been identified throughout the permit area.
Europa said it planned to mature several of those stacked prospects - which each reportedly had the potential to hold more than 250 million barrels of oil - to drillable status, with a view to attracting one or more farminees to drill an exploration well in the second phase of the licence.
The board said the licence, which lay in water depths of between 600 and 2,000 metres, had an eight-year term and comprised three phases.
During the two-year initial phase, Europa would undertake a work programme, which would include reprocessing 1,300 square kilometres of 3D seismic data, as well as other technical studies.
At the end of the initial phase, Europa said it would have the option to commit to drilling an exploration well in the second phase or to relinquish the licence.
To date, only 10 wells have been drilled in deepwater Morocco, of which only three had penetrated a complete Lower Cretaceous section.
Given the deepwater basins extended for around 1,800 kilometres offshore Morocco, the board said it was "clear" that the play was "highly under-explored".
It added that if the Lower Cretaceous play could be successfully unlocked, "enormous upside" lay within the rest of the licence area.
"The Inezgane Permit in Morocco is an excellent technical fit with Europa's substantial licence position in the Porcupine Basin in Ireland where, among other plays, we are also targeting the Lower Cretaceous, a prolific producer in West Africa," said Europa chief executive officer Hugh Mackay.
"In terms of our investment criteria, Morocco ticks all the boxes: a stable country with a transparent business environment; excellent fiscal terms; and low political and regulatory risk.
"From a technical, commercial and strategic perspective Morocco therefore represents an obvious new country for Europa's technical team to deploy the first-rate knowledge and understanding of Lower Cretaceous plays it has gained through its work across our industry-leading licence position in offshore Ireland."
Mackay said the company "looked forward" to working with ONHYM in the initial phase of the licence to mature prospects, which he said had the potential to hold up to 250 million barrels of oil each, to drillable status over the next two years.
"Together with our well-established positions in Ireland and the UK, we now have multiple work streams underway concurrently, all of which have the potential to generate significant value for our shareholders.
"With this in mind, I look forward to providing further updates on our progress."
3 May 2024 20:29
IN BRIEF: Europa Oil & Gas withdraws from UK offshore licensing round
Europa Oil & Gas (Holdings) PLC - UK and Ireland-focused oil and gas exploration, development and production company - Updates on the company's application for a licence as part of the 33rd UK Offshore Licensing Round that closed in January. Says the North Sea Transition Authority proposes a marriage between Europa and another party for the Licence. But, Europa decides not to accept the proposed marriage and also notifies the NSTA that, if the NSTA subsequently decide to award the Licence, in its entirety to the company as the sole owner, Europa would decline the offer. Europa explains that since its original application various aspects of the operating conditions and the fiscal environment have changed and remain uncertain. This reduces the economic and strategic attractiveness of the licence. As such, Europa believes that its resources are better deployed on its existing assets and looking for new opportunities within its core areas of focus.
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