IOG.L Regulatory News (IOG)

9 Oct 2006 14:31

EnCore Oil PLC09 October 2006 PRESS RELEASE For immediate release: Monday 9 October 2006 EnCore Oil plc("EnCore" or "the Company") ENCORE OIL TO COOPERATE WITH ISLAND OIL & GAS ON PORTFOLIO DEVELOPMENT EnCore Oil plc ("EnCore") today announces that it has entered into a CooperationAgreement (the "Agreement") with Island Oil & Gas plc ("Island") covering thefuture development by both companies of their respective portfolios ofexploration and near- development interests both in Ireland and the UK. As partof the Agreement, EnCore has also been granted exclusive options (the "options")by Island to acquire up to a 20% working interest in the Island-operatedFrontier Exploration Licence 1/04 ("FEL 1/04") on the Atlantic margin 150 kmoffshore the west of Ireland in the Porcupine Basin. FEL 1/04, which covers Block 26/28 and Part-blocks 26/27, 35/2 & 35/3, containsthe Connemara oil field and several undrilled exploration prospects. Under theAgreement, EnCore has paid an initial refundable deposit of Stg £2 million tosecure exclusive options to acquire up to a 20% interest in FEL 1/04. The firstoption to acquire a 10% interest in FEL 1/04 is exercisable up until 30 November2006, with a second option, to acquire a further 10% interest, exercisable by 10January 2007. Any assignment of interest in FEL 1/04 will of course be subjectto the consents and approvals of the Minister for Communications, Marine andNatural Resources. The undeveloped Connemara oil field was discovered by BP in 1979 following thedrilling and testing of the 26/28-1 well, which flowed at a rate of 5,589 bopdfrom Jurassic reservoirs. In 1997, at a time of low oil price, Statoil attemptedto appraise and develop the field by drilling two horizontal wells. Based on theanalysis of the results of these wells Statoil relinquished the licence in 1999.Statoil's estimate of oil in place at that time was 220 million barrels. Islandhas completed a programme of 2D and 3D seismic reprocessing which has led bothto a significant improvement in seismic imaging of the principal oil-bearingreservoirs in the field and to a better definition of faulting. This hasidentified areas of the field that are less faulted than the areas tested byprevious wells. In addition Island has completed a new reservoir study thatindicates that several of the principal oil-bearing sands are potentially morecontinuous than had formerly been interpreted. Paul Griffiths, Chief Executive of Island, commented: "We are delighted to announce the Cooperation Agreement with EnCore which, whencombined with the steps that we have announced today to increase our equityposition in FEL 1/04, allow us to accelerate our evaluation and potentialcommercialisation of our exploration and near development assets along theAtlantic margin. We look forward to developing an ongoing business relationshipwith EnCore and believe that the synergies between the companies can acceleratethe growth and development of our respective portfolios." Alan Booth, Chief Executive of EnCore, said: "We are particularly pleased about this opportunity to work closely with Island.With this relationship, we believe we will be in a position to advance ourrespective portfolios through joint evaluations and where appropriate, to shareresources on exploration and near term development interests in the E&P sector." For further information, please contact: EnCore Oil plc www.encoreoil.co.ukAlan Booth, Chief Executive Officer +44 (0)20 7224 4546Eugene Whyms, Chief Financial Officer Aquila Financial Limited www.aquila-financial.comPeter Reilly +44 (0)20 7202 2601 Notes to Editors: About EnCore EnCore Oil plc is a UK focused exploration and production company listed on theAlternative Investment Market (AIM) on the London Stock Exchange. EnCore'sstrategy is to create shareholder value through the successful exploration andappraisal of prospects and discoveries, and the development of those assetsthrough to commercial sanction or beyond. Further information on EnCore can be found on the Company's website atwww.encoreoil.co.uk. About Island Island was founded in 2003 and listed on AIM in December 2004. Island hasinterests in eleven Irish offshore licences, (six as operator and two astechnical manager). Island is involved in an active exploration and appraisalprogramme with three wells drilled in 2006, two of which were successful gasdiscoveries. Island has also secured the Petrolia rig for its planned 2007drilling programme. Further information on Island can be found on the company's website atwww.islandoilandgas.com. This information is provided by RNS The company news service from the London Stock Exchange