LONDON (Alliance News) - Fastnet Oil & Gas PLC Thursday said that it has agreed improved terms and extended its exclusive option agreement to farm-in to the Deep Kinsale prospect beneath the Kinsale head gas field.
Fastnet Oil & Gas is an oil and gas exploration company focused on near-term exploration and appraisal acreage in Morocco and the Celtic Sea.
The option agreement has been extended to March 31, 2015, while the commitment to start drilling a well has been extended to on or before December 31, 2016.
The agreement also includes the deletion of the Kinsale Energy back-in option, which had allowed Kinsale Energy to increase its interest in the Kinsale Deep Sub-Area by 10% by paying for 16.667% of the drilling and testing costs of the farm-in well.
It also removes Kinsale Energy's right to increase its working interest by up to 15% for no consideration if there is a commercial development, the level of the increase dependent on the level of production.
After completion and, if warranted, testing of the farm-in well and funding of all drilling and testing costs, Fastnet's net equity interest will be fixed at 60% working interest in the Deep Kinsale Sub-Area, the company said.
Paul Griffiths, Managing Director of Fastnet, said the new terms of the Deep Kinsale Prospect "greatly" improve the project economics and "significantly" improve materiality" for Fastnet and any potential company farming in to the project.
"The extension of the deadline to exercise the option and the commencement of a well works well with our timeline to complete a Farmin transaction from our ongoing process. Fastnet has considerably advanced the technical understanding and de-risked the opportunity at Deep Kinsale based on our extensive interpretation of our newly acquired 3D seismic data (2013)," Griffiths said.
"Fastnet has progressed potential farmin discussions with a number of industry players and we seek to close out a transaction with a potential drilling partner for Deep Kinsale and recover substantial past costs to further strengthen our already significant discretionary cash balances," he added.
Fastnet shares were Thursday quoted up 4.1% at 5.10 pence.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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