Europa Oil & Gas Regulatory News (EOG)

Europa Oil & Gas (Holdings) plc / Index: AIM / Epic: EOG / Sector: Oil & Gas 2 March 2015 Europa Oil & Gas (Holdings) plc (`Europa' or `the Company') Shareholder Newsletter Europa Oil & Gas (Holdings) plc, the AIM quoted oil and gas exploration anddevelopment company with a combination of producing and exploration assets inEurope, is pleased to announce that a newsletter detailing ongoing and upcomingactivity across its portfolio of projects onshore UK, onshore France andoffshore Ireland has today been sent to subscribers and can be found at thefollowing link on the Company website: http://www.europaoil.com/documents/2015investorletter020315FINAL.pdf The text of the newsletter, which does not contain any price sensitiveinformation, is repeated below: Dear Investor The first two months of 2015 have already brought several items of high impactnewsflow across our three areas of focus: onshore UK; onshore France; andoffshore Ireland. Wressle Onshore UK, testing operations at the Wressle exploration discovery well inPEDL180 in the established East Midlands Petroleum Province commenced inJanuary 2015 and remain ongoing. The well was spudded in August 2014 and inSeptember we announced that we had discovered hydrocarbons in three levels. Thetesting operation is allowing us to evaluate hydrocarbon type through therecovery of oil, pressure data and other information that will enable us tobetter understand hydrocarbon phase, reservoir quality and reservoirperformance. The result of test 1 in the Ashover Grit was announced on 9 February andreported free flowing oil production rates equivalent to 80 barrels of oil perday (`bopd'), along with 47 thousand cubic feet (`mcf') of gas per day. Theresults of test 2 in the Wingfield Flags were announced on 19 February andreported free flowing oil production rates equivalent to up to 182 bopd, alongwith 456 mcf of gas per day. Test 3 in the Penistone Flags is ongoing. Clearlythis is a very promising start to operations and the data recovered is beinganalysed to enable an extended well test (`EWT'). EWT operations typically involve production of hydrocarbons for a period ofweeks or months with the purpose of obtaining more detailed and insightfulinformation about reservoir performance. This information will be used todesign the optimum Field Development Plan (`FDP'). Europa and its partners willapply to the Department of Energy and Climate Change (`DECC') for approval ofthe EWT. When approving the EWT, DECC will specify the volume of hydrocarbonsthat we are allowed to produce. Any oil produced by the EWT will be sold. DECC approval of the FDP is also required before long term productionoperations can take place. It is currently anticipated that EWT operations,compilation of the FDP together with obtaining all relevant permissions andpermits for a development will take place during 2015. Exact timing of the EWTwill depend on the outcome of a reservoir engineering review which will definethe completion strategy and the surface package of equipment required. Europahas a very strong reservoir engineering capability and we will put theseabilities to full use in evaluating the Wressle test results. Kiln Lane Operations for the Kiln Lane exploration well in the adjacent PEDL181 haveproceeded according to plan and the well was spudded on 23 February 2015. KilnLane is a conventional oil prospect with gross mean un-risked prospectiveresources of 2.9 mmbo. In the event that we discover oil then operations willfollow a similar schedule to that at Wressle: after wireline loggingoperations, the well will be suspended and the drilling rig demobilised, wewill return with a dedicated test rig to undertake production testingoperations. Assuming exploration success, the timing of testing will depend onthe nature of hydrocarbons found which will inform detailed test design andspecification of equipment. Should production testing have a successful outcomethen we will follow up with an EWT and in parallel with this begin compilationof a FDP and other permitting requirements for a development. It is currently expected that these activities would take place during 2015 andthat any oil produced by the Kiln Lane EWT would be sold. Exploration successat Kiln Lane would be a playmaker and there are a number of conventional oilexploration leads elsewhere on the licence area that would be derisked and willbe further evaluated. Holmwood The planning inquiry for the Holmwood well in PEDL143 will be conducted in twoparts with the first for the original application site taking place in April2015. As a consequence of changes to the regulatory regime we have had to applyfor planning permission for the underground deviated well path. In the eventthat planning permission for the deviated well path is refused the planninginspector will hear the evidence in the second part of the planning enquiry andmake one decision for both the surface site and deviated underground well path.We are preparing very thoroughly for the inquiry. Following the inquiry it isexpected that the planning inspector's decision should be announced in H2 2015.A successful outcome would result in drilling the Holmwood exploration well,with 2016/17 being the most realistic timing for this activity. TheInfrastructure Act 2015 has recently become law and will facilitate subsurfaceaccess issues. 14th Onshore UK Licensing Round Europa has bid in the 14th onshore UK licensing round and we anticipate thatthe results will become known in H1 2015. We understand that the round has beencompetitive with some 95 applications submitted and we hope that this highlevel of interest will result in a step up in exploration activity onshore UKover the next few years. Current Production Our onshore production remains an important source of revenue for the Company.As we have previously communicated, our existing fields are in long termdecline and the best way for us to increase production is through theexploration drill bit. We have got off to a good start with the Wresslediscovery and the Kiln Lane well offers another opportunity to find oil. Wecontinue to undertake initiatives to reduce operating costs at our fields andto minimise downtime. Obviously it is disappointing that the WF9 producing wellhas had to be shut in, however, at only 8 bopd, its contribution to our totalproduction was small. Rest assured that converting Wressle and Kiln Lane intorevenue generating production will be a priority should the EWT results bepositive. France In France we announced on 16 February that we have farmed out the Tarbes Vald'Adour permit to Vermilion Energy. As should be expected, Europa does notprovide the market with a running commentary on progress of any of our farm-outactivity and will only make announcements once a farm-out document has beensigned. In this instance the Heads of Terms were signed in July 2014 and theintervening period was spent completing the detail of the farm-out. Under theterms of the farm-out, Vermilion will be assigned operatorship and an 80%interest in the Tarbes permit and will carry Europa for a €4.65 million workprogramme. Once the carry is fulfilled Europa will pay its 20% equity share ofany subsequent expenditure. Vermilion is the leading operator in onshore Franceand is the ideal partner for our operations. The farm-out is subject toobtaining government approval for the assignment of equity and operatorship andfor an extension to the term of the permit. The process for both of theserequired approvals began in H2 2014 and will take a number of months tocomplete. We hope to obtain the approvals at some point during 2015. The Berenxfarm-out process is on-going and announcements will be made when there issomething substantive to report. Ireland The jewel in our crown is our Irish Atlantic offshore portfolio. Considerableprogress was made in 2014 and it is expected that a drilling decision will bemade during H1 2015. Following farm-out to Kosmos in April 2013 we converted toFrontier Exploration Licences (`FEL') in July 2013 and between July and OctoberKosmos acquired a 5,028 km2 3D seismic survey, the biggest ever in Ireland.Processed data became available in April 2014 and in early December 2014 Kosmosdelivered the prospect inventory. Across our two licences FEL 2/13 and FEL 3/13our new prospect inventory shows combined gross mean un-risked prospectiveresources of 1.5 billion barrels of oil (resources by definition arerecoverable). Prospects Beckett and Wilde in FEL 3/13 have gross meanprospective resources of 760 mmbo and 493 mmbo respectively and in FEL 2/13 theDoyle A and Doyle B prospects have gross mean prospective resources of 123 mmboand 69 mmbo. The new prospect inventory is based on state of the art 3D seismic which madefull use of all the latest technical developments in acquiring, imaging andinterpreting data in deepwater environments. The old prospect inventory wasbased on a sparse grid of historic 2D seismic of various vintages and dataquality. In these circumstances it is not unheard of for prospects to disappearcompletely once infill seismic is acquired. This is clearly not the case withour licences in Ireland: the new seismic has confirmed the presence ofprospects, with much greater confidence than before and the prospectiveresources are very large. This is a significant and positive development.Technical work is currently being conducted on prospect risking and ranking, inparticular using special seismic analysis to identify direct hydrocarbonindicators, flat spots, conformance and AVO anomalies. These are desktopstudies and do not require more seismic acquisition. It is currently expectedthat this work will be completed in H1 2015 and will enable a drill decision tobe made. If a decision is made to drill in summer 2016, then substantial workwill be conducted during 2015 to make the operation drill-ready. The IrishAtlantic Margin licensing round closes in September 2015 and we will beparticipating in it. Competent Persons Report Europa will complete and issue a Competent Persons Report during H1 2015. Thiswill be issued in two parts. Part 1 on the Irish portfolio will be issued firstand part 2 updating our UK and French portfolios will follow and will includeresults of Wressle testing and Kiln Lane drilling. Outlook Oil is a cyclical industry and after three years of stable prices in excess ofUS$100 a barrel we are currently in a downturn. Three years ago the combinedvalue of the 100+ oil and gas companies on AIM was almost £20 billion, today itis just over £4 billion. Clearly these are difficult times for all oilcompanies, however, these circumstances do help crystallise action and createopportunities. As well as prudently managing our revenue and our cash wecontinue to evaluate consolidation opportunities and will not hesitate to actwhere we can identify value for Europa shareholders. Finally I would like to bid farewell to our outgoing Chairman Bill Adamson andwelcome Colin Bousfield as our new Chairman. Bill was responsible forrecruiting me into Europa and he has provided sound advice to the Board over anumber of challenging issues. We wish him well in his future endeavours. Colinis a proven deal maker and we hope to make full use of these talents. 2015 has started well, with positive results from Wressle testing, commencementof drilling at Kiln Lane and the farm out of Tarbes to Vermillion. Themanagement and board at Europa are committed to maximising value forshareholders and we will continue to execute our plans to progress our licencesand expand our portfolio during the remainder of 2015. I am sure that when Iwrite to you again I will be reporting further success. Yours sincerely Hugh Mackay CEO * * ENDS * * For further information please visit www.europaoil.com or contact: Hugh Mackay Europa + 44 (0) 20 7224 3770 Phil Greenhalgh Europa + 44 (0) 20 7224 3770 Matt Goode finnCap Ltd +44 (0) 20 7220 0500 Simon Hicks finnCap Ltd +44 (0) 20 7220 0500 Frank Buhagiar St Brides Partners Ltd +44 (0) 20 7236 1177 Lottie Brocklehurst St Brides Partners Ltd +44 (0) 20 7236 1177 Notes Europa Oil & Gas (Holdings) plc has a diversified portfolio of multi-stagehydrocarbon assets that includes production, exploration and developmentinterests, in countries that are politically stable, have transparent licensingprocesses, and offer attractive terms. The Company produced 165 boepd in the UKduring the 2013/2014 financial year, generating sufficient revenues to covercorporate overheads and some exploration expenditure. Its highly prospectiveexploration projects include the Wressle (recently drilled and undergoingtesting) and Kiln Lane prospects in the UK; 100% owned gas exploration prospect(107 bcf) and appraisal project (CPR 277 bcf) in onshore Franc a joint venturewith Vermillion Energy also in onshore France; and a joint venture with leadingindependent Kosmos to explore two licences in offshore Ireland with thepotential to host gross mean unrisked prospective resources of 1.5 billionbarrels. Qualified Person Review This release has been reviewed by Hugh Mackay, Chief Executive of Europa, whois a petroleum geologist with 30 years' experience in petroleum exploration anda member of the Petroleum Exploration Society of Great Britain, AmericanAssociation of Petroleum Geologists and Fellow of the Geological Society. MrMackay has consented to the inclusion of the technical information in thisrelease in the form and context in which it appears.