(Alliance News) - Oilex Ltd said Monday it has signed an exclusivity agreement with Koru Energy Ltd for the potential acquisition of a 50% interest in the Knox, Lowry, and Whitbeck gas discoveries in the East Irish Sea.
Shares in the oil & gas explorer were 14% higher at 0.20 pence on Monday.
The three gas discoveries are shallow-water gas accumulations, with Knox and Lowry already drill stem tested with raw gas flows of 12.3 million and 22 million cubic feet per day, respectively.
Koru currently holds the exclusive right to acquire a 100% interest in the UK seaward production licence P2459, containing the three licences, from Reach Coal Seam Gas Ltd.
Under the proposed agreement, Oilex will acquire a 50% interest in the licences for GBP500,000, with Koru holding the remaining 50% under a joint venture.
So far, Oilex has paid a non-refundable GBP50,000 exclusivity fee to Koru and has been granted exclusivity until the end of September.
Oilex is currently in advanced negotiations with potential co-investors, who would substantially fund Oilex's payment, should the proposed transaction complete.
If this takes place, Oilex's beneficial interest in the joint venture will be reduced.
"The licences, which incorporate discovered and tested gas volumes and comprise a portfolio of projects, provide the initial platform for the company to build the necessary critical mass for a sustainable UK Continental Shelf business," said Managing Director Joe Salomon.
"Having recently entered the Cooper Basin, and also come to an agreement with Gujarat State Petroleum Corp relating to the Cambay licence, we are now making progress on three fronts, and significantly adding to the company's opportunity set through which to build value for investors," Salomon added.