Total will expand its deepwater exploration and production efforts to Ireland’s offshore after entering options to acquire interests and operatorships in southern Porcupine Basin licenses.
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| Image: Providence Resources |
The company has entered an agreement with Providence Resources to farm into an upcoming wildcat well and the operatorship of frontier exploration license (FEL) 2/14 offshore southwest Ireland, Providence reported in a 7 June press release.
Under the agreement, Total would have the option and right to farm into a 35% working interest in FEL 2/14 from Providence and Sosina, subject to payments of US$21.6 million to Providence and US$5.4 million to Sosina.
Total can exercise the option within 60 business days of the completion of the upcoming 53/6-A well, which is planned to spud in late June 2017 targeting the Paleocene Druid and Lower Cretaceous Drombeg prospects.
Located in approximately 2250m of water in the southern Porcupine Basin about 220km offshore southwest Ireland, FEL 2/14 also contains the Jurassic Diablo exploration prospect.
Should Total subsequently elect to exercise the option, the joint venture partners will have the benefit of being operated by an industry leader in deepwater hydrocarbon exploration and development, Providence Chief Executive Tony O’Reilly said.
Providence is operator of the license with 56% interest. Its partners in the license include Capricorn Ireland Limited - a wholly owned subsidiary of Cairn Energy PLC - with 30% interest, and Sosina Exploration Limited with 14%. Earlier this month, Providence received permission to transfer a 30% interest in FEL 2/14 to Capricorn.
In a separate agreement, Total will acquire 50% working interest in licensing option (LO) 16/27 from Providence and Sosina. LO 16/27. The option contains the Avalon prospect, which lies in approximately 1300m of water in the southern Porcupine Basin approximately 150km off southwest Ireland. Under the agreement, Total will pay pro-rata share of past gross costs of approximately $0.175 million, and pay 21.4% of the past and future costs during the two-year term of LO 16/27, subject to a gross cost cap of $1.33 million.
Total also will assume operatorship of LO 16/27. If the partners decide to convert LO 16/27 into an FEL and drill an exploration well, Total will pay 60% of the drilling costs, subject to a gross well cap of $42 million.
Additionally, Providence and Sosina signed an option agreement with Capricorn that would allow Capricorn to farm into a 20% interest in LO 16/27. Capricorn can exercise the option within 60 days of the completion of the upcoming 53/6-A well on Frontier Exploration Licence 2/14.
If Capricorn exercises the option, it would pay its pro-rata share of past gross costs of up to $0.175 million. It would also pay 8.6% of the past and future costs during the 2-year term of LO 16/27, subject to a gross cost cap of $1.33 million. Capricorn also agrees to pay 24% of the drilling costs, subject to a gross well cap of $42 million, if LO 16/27 is converted into a license and an exploration well is drilled.
“We are delighted to have agreed this farm-in transaction on Avalon with one of the world’s leading E&P companies which provides further significant technical, financial and operational capability to the LO 16/27 joint venture group,” O’Reilly said. “We are also pleased to announce this option agreement with Cairn. This further potential transaction would serve to create a common partnership with our nearby Druid block with which Avalon shares many geological similarities.”
These agreements are subject to final approval by Ireland’s Minister of Communications, Climate Action and Environment.
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