Barryroe Update - Farm-Out Agreement Signed
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain. If you have any queries on this, then please contact Steve Boldy, the Chief Executive Officer of the Company (responsible for arranging release of this announcement).
30 November 2020
Lansdowne Oil & Gas plc
("Lansdowne" or the "Company")
Barryroe Update (SEL 1/11)
Farm-Out Agreement Signed
Lansdowne and Providence Resources P.l.c. ("Providence") have agreed to Farm-out a 50% working interest in the Barryroe Oil and Gas Field to SpotOn Energy Ltd. ("SpotOn"), a Norwegian based resources company partnering with a Consortium of International Service Providers (together "SpotOn Consortium") to fund, develop and produce the Barryroe Oil and Gas Field.
The Barryroe Oil and Gas Field lies c. 50 km off the south coast of Ireland in shallow water (c. 100 m water-depth) and is one of the largest undeveloped oil and gas fields offshore Europe, with independently audited 2C resources of 346 MMboe and significant further resource potential in additional reservoirs.
The SpotOn Consortium will fund 100% of the Early Development Programme ("EDP") and the Full Field Development.
The EDP, which includes four wells and floating production facilities, is designed to both appraise and produce the Barryroe Field, generating the technical data required to optimise the Full Field Development Programme.
The SpotOn Consortium holds the experience, financial wherewithal and expertise to move ahead with the Barryroe project.
SpotOn will finance Lansdowne and Providence's 50% share of the EDP costs by way of a Non-Recourse Loan, which is secured against future Barryroe Production Cashflow
Lansdowne Oil & Gas plc (AIM: LOGP), the North Celtic Sea focused, oil and gas company, is pleased to provide a commercial update on Standard Exploration Licence ("SEL") 1/11 which includes the Barryroe oil and gas field. Lansdowne holds a 20% interest in SEL1/11 through its 100% owned subsidiary, Lansdowne Celtic Sea Limited, with EXOLA DAC ("EXOLA"), a wholly owned subsidiary of Providence Resources, holding the remaining 80% and being Operator of the Licence, collectively the "Barryroe Partners". SEL1/11 lies in c. 100 metre water depth in the North Celtic Sea Basin and is located c. 50 km off the south coast of Ireland.
The Company is pleased to announce that the Barryroe Partners have signed a Farm-Out Agreement ("FOA") with SpotOn Energy Ltd ("SpotOn") in relation to SEL 1/11.
Under the terms of the FOA, in consideration for SpotOn being assigned a 50% working interest in SEL 1/11, SpotOn, upon closing of the Farm-Out, is committing to the following commercial terms and work programme commitments:
Main Commercial Terms
• SpotOn farms-in to a 50% interest in SEL 1/11 which includes the Barryroe oil and gas field. Lansdowne will retain a 10% interest, and EXOLA a 40% interest in SEL 1/11.
• The farm-in is conditional upon SpotOn confirming that a minimum of US$ 166 million in funding (the agreed funding), for the Early Development Programme (EDP) is in place and Irish government approval for the Farmout agreement has been received.
• SpotOn provides a $5million non-recourse loan to Providence to fund EXOLA in the preparatory and permitting works required to progress the EDP Work Programme for the Barryroe Oil and Gas Field.
• SpotOn is directly responsible for paying 50% of all cost obligations associated with the EDP Work Programme and the Full Field Development of the Barryroe oil and gas field.
• SpotOn will also provide finance, by way of non-recourse loan facilities, for the remaining 50% of agreed cost obligations attributable to Lansdowne & EXOLA in respect of the EDP Work Programme and the Full Field Development.
• The funding will incur a blended average annual interest rate of less than 8% through the repayment period which will be repayable from SEL 1/11 production cashflow. SpotOn is entitled to 80% of the net production cashflow from SEL 1/11 until the debt is repaid.
• Following debt repayment, SpotOn will be entitled to 50% of the net production cashflow from SEL 1/11 with Lansdowne & EXOLA being entitled to 10% and 40% of net production cashflow, respectively.
Work Programme Commitments (Subject to Regulatory Approval)
• The EDP work programme, subject to declaration of commerciality and the granting of a Petroleum Lease, is focused upon delivery of production from the Eastern panel within the Barryroe Licence area of the Barryroe oil and gas field as a precursor to the phased full field development of the field and will include:
• Drilling and completing three production wells each with a horizontal production section in the Basal Wealden A reservoir.
• Drilling and completing a water injection well in the Basal Wealden A reservoir.
• The four wells will be directionally drilled to access optimum locations within the Eastern panel and will deliver further information on the main Basal Wealden reservoir.
• The horizontal reservoir sections will be designed to maximise production and may extend into adjacent reservoir panels to assess reservoir connectivity.
• The wells will be completed with subsea trees; tied into a production manifold and connected to a leased FPSO with production separation, water and gas injection capabilities and include flow assurance measures.
• Planning for the drilling of these wells is at an advanced stage with two well site locations already surveyed and a third location which is subject to Ministerial approval.
• The SpotOn Consortium is sourcing the rig which, subject to regulatory approval, expects to mobilise to the Barryroe oil and gas field in late 2022.
• SpotOn will be appointed Technical Advisor and work in partnership with EXOLA to prepare the detailed work programme for the EDP.
• EXOLA as Operator of SEL 1/11 will work with SpotOn to expedite the transfer of operatorship to SpotOn, subject to Government approvals.
Closing
The Closing of the Farm-Out ("Closing"), is conditional on completion of all ancillary documentation required to implement the terms of the FOA and is subject to the approval of the Minister at the Department of the Environment, Climate and Communications.
Steve Boldy CEO of Lansdowne Oil & Gas commented:
"We are delighted to have signed the Farm-out Agreement for the Barryroe field, which provides a clear path forward to production of oil and gas via the Early Development Programme. Indigenous energy supplies for Ireland will become increasingly important in light of declining gas production from the Corrib Field and Barryroe will make a critical contribution as Ireland transits to a low carbon future. Lansdowne also supports fully the initiatives being pursued to evaluate Carbon Capture and Storage potential to accompany production. We look forward to working closely with EXOLA and SpotOn to progress the project to fruition."
For further information please contact:
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Lansdowne Oil & Gas plc |
+353 1 963 1760 |
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Steve Boldy |
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SP Angel Corporate Finance LLP |
+44 (0) 20 3470 0470 |
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Nominated Adviser and Joint Broker |
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Stuart Gledhill |
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Richard Hail |
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Brandon Hill Capital |
+44 (0) 20 3463 5061 |
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Joint Broker |
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Oliver Stansfield |
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Notes to editors:
About Lansdowne
Lansdowne Oil & Gas (LOGP.LN) is a North Celtic Sea focused, oil and gas exploration and appraisal company quoted on the AIM market and head quartered in Dublin.
For more information on Lansdowne, please refer to www.lansdowneoilandgas.com.
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