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LONDON (Alliance News) - Cluff Natural Resources PLC Wednesday said it has entered into a deal to potentially acquire an interest in three licences within the Central North Sea and the Moray Firth that are targeting up to 400 million barrels of oil.
The natural resources investment company said it has signed heads of terms with Verus Petroleum Ltd and Verus Petroleum Ltd, both of which are subsidiaries of Verus Petroleum UK Ltd, to acquire up to a 25% participating interest in the three licences.
All three licences are operated by The Parkmead Group PLC, another London-listed company, and two of the licences are "effectively drill-ready," the company said.
Cluff is paying only GBP1 per option agreement.
Under the deal, Cluff is proposing to initially acquire a 5% non-operated interest in licences P1944 covering Block 14/20e in the UK Continental Shelf and in P2156 covering Blocks 15/11 and 15/16f in the Outer Moray Firth, which hosts the Fynn and Penney exploration prospects.
The deal also includes an exclusive option that allows Cluff to increase its stake in those two licences to 25% within nine months of acquiring the initial 5% interest.
Another exclusive option allows Cluff to acquire a 25% interest in licence P2082 covering Blocks 30/12c, 13c, 17e and 18c, which is in the Central North Sea and contains the Skerryvore exploration prospect.
All three licences potentially hold 400.0 million barrels of recoverable oil, of which 100.0 million barrels would be net to Cluff if it held a 25% interest in all three licences.
The Skerryvore and Flynn prospects are "effectively drill-ready" and Cluff is expecting a well to be drilled on each prospect within the next 12 to 24 months in order to take advantage of the lower costs driven by the fall in oil prices.
"These proposed acquisitions complement our existing five licences in the Southern North Sea which demonstrated significant gas potential and represent the first steps to creating a diversified portfolio of exploration and appraisal assets," said Algy Cluff, chairman and chief executive of the company.
Cluff Natural shares were up 2.7% to 1.92 pence per share on Wednesday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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