18 Jun 2015 07:00
18 June 2015 For immediate release
InfraStrata plc
("InfraStrata" or the "Company")
Licence P1918 Update
InfraStrata plc (AIM:INFA), the independent petroleum exploration and gas storage company, is pleased to provide an update on its activities on Petroleum Licence P1918 ("P1918"), offshore Dorset. In October 2014, the Company announced that together with joint venture partners Corfe Energy Limited ("Corfe") and Brigantes Energy Limited ("Brigantes"), it had signed a farm-in agreement with Southwestern Resources Limited ("Southwestern") with respect to offshore Dorset licence P1918 (the "Agreement").
Under the terms of the Agreement, Southwestern was granted the rights to a 10% interest in P1918 in return for funding the reprocessing of existing 3D seismic data and acquiring new 2D seismic data. Following the agreement InfraStrata's interest in the licence was 54.00%, with a further net interest of 14.40% via its shareholdings in Corfe and Brigantes.
Good progress has been made with the Pre-stack Depth Migration reprocessing of two offshore 3D seismic surveys in the north of Block 98/11 acquired during 1992 and 1999, with delivery of final products expected by the end of June 2015. The reprocessing of the data has focused on the undeveloped Colter, Old Harry and Ballard Point discoveries. The largest of these, the Colter Prospect, is located within a fault block immediately to the south of the giant Wytch Farm oilfield. The 98/11-3 well was drilled on the prospect in 1989 by Gas Council (Exploration) Ltd and encountered a 10.5 metres vertical oil column in the Sherwood Sandstone with an oil-water-contact at a depth of 1,739 metres sub-sea. Reservoir quality is very similar to that observed in Wytch Farm.
Permitting is nearing completion for the 2D seismic acquisition over the Purbeck Prospect where the Company has planning permission to drill a well, California Quarry-1, from onshore to offshore within P1918. However, due to a seasonal restriction it will not be possible to acquire the data until August 2015 at the earliest.
A well is required to be drilled by February 2016, the end of the first term of the licence, to retain P1918 into its second term. However, as the Company explained in its Interim Report in April 2015, InfraStrata will not be able to commit to a drilling rig for California Quarry-1 to test the Purbeck Prospect until the 2D seismic has been acquired, processed and interpreted. In addition, the proposed California Quarry-1 well is an onshore to offshore well and it is necessary for the area from which a well is drilled to be held under a petroleum licence, either by InfraStrata or by a third party. This will need to await the results of the 14th Landward Licensing Round, which is expected to be announced later this year. These factors mean that it will not now be possible for the well to be drilled before the February 2016 deadline. With this in mind, the JV group will be seeking an extension to the initial term of the licence.
Under the Agreement, Southwestern was granted an exclusive option until July 2015 to acquire a further 65% interest (75% in total) from InfraStrata and partners on a pro-rated basis by funding 100% of the costs of an offshore exploration well in the P1918 licence (the "Offshore Option"). If the Offshore Option were exercised, InfraStrata's net interest in P1918 would be 19%, with its costs carried through the drilling of the well. If Southwestern were to elect to drill the cheaper onshore to offshore well, California Quarry-1, they would have been granted a further 40% interest rather than 65%.
Given the delays to the project and the need to be granted an extension for the initial licence term, InfraStrata and partners have signed a new binding Heads of Terms Agreement ("Terms") with Southwestern. Under the Terms, the value of the initial carried work programme has been reduced to $400,000 (approximately £260,000) from the originally agreed £500,000. The revised sum will cover the cost of the ongoing seismic reprocessing work and the new seismic acquisition. The new seismic acquisition is contingent on being granted an extension to the licence period. The Terms also simplify the option rights for Southwestern to increase its interest in the licence: the option exercise period has been extended to the end of April 2016 and in the event that Southwestern elect to drill the California Quarry-1 well first on licence P1918, as with the Offshore Option, their interest would increase by 65% to 75% and they will carry InfraStrata, Corfe and Brigantes for their combined 25% interest through this well and if a second well is drilled on the licence, the carry would also now extend to this well.
Commenting on the announcement, Andrew Hindle, CEO of InfraStrata said:
"Good progress has been made with the further evaluation of the prospectivity on P1918. We have been developing a wider exploration strategy for the Dorset area with partners and will provide a further update over the Summer on those activities as well as hopefully confirm an extension of the licence term to enable an exploration well to be drilled in 2016."
For further information please contact:
InfraStrata plc
Andrew Hindle, Chief Executive Officer 020 8332 1200
Stewart McGarrity, Finance Director
Financial PR - Buchanan
Richard Darby/ Anna Michniewicz 020 7466 5000
Nominated Adviser and Joint Broker - Allenby Capital Limited
Jeremy Porter / Alex Brearley 020 3328 5656
Joint Broker - VSA Capital Limited
Andrew Raca/ Richard Buckle 020 3005 5004
Notes to Editors:
Background on InfraStrata plc
InfraStrata is an independent petroleum exploration and gas storage company focused on the UK and Ireland.
Further information is available on the Company's website www.infrastrata.co.uk.
Background on Licence P1918
Petroleum licence P1918 comprises Blocks 97/14, 97/15 and 98/11 and was awarded in February 2012 by DECC for a period of four years. Within and immediately adjacent to the licence area there are a number of active oil and gas seeps. A total of seven wells have previously been drilled within the licence area, including the first UK offshore well in 1963 on Lulworth Banks in Block 97/14. Six of these wells encountered oil or gas shows and three flowed oil or gas on test.
In accordance with the AIM Rules - Note for Mining and Oil and Gas Companies, the information contained in this announcement has been reviewed and signed off by the Chief Executive Officer of InfraStrata plc Andrew Hindle BSc, MSc, PhD, a Chartered Geologist with 30 years' experience, a Fellow of the Geological Society of London, and a member of the American Association of Petroleum Geologists and the Petroleum Exploration Society of Great Britain.