Europa Oil and Gas has announced that its fully owned subsidiary has signed an agreement with Upland Resources to sell 10% interest of PEDL180 and PEDL182 licences in North Lincolnshire.
The licences cover the Wressle discovery (PEDL180) and the Broughton North prospect (PEDL182).
Under the agreement, Upland will purchase a 10% working interest in the licences from Europa by paying a consideration of £1.85m. The amount includes an initial consideration of £1.6m and a contingent consideration of £0.25m.
The initial consideration will be paid through cash and shares that includes £1.3m in cash and and 23.08 million ordinary Upland shares to the value of £0.3m.
Completion of the deal is subject to approval from the Oil and Gas Authority and the approval of Wressle Field Development Plan.
After the transaction, Europa expects to increase its overall production to 220bopd, provided the company has a positive cash flow and oil prices remain above $30 per barrel.
Europa CEO Hugh Mackay said: “Europa is delivering on its strategy to actively manage its portfolio and realise value for shareholders.
"So far this year we have farmed out part of our interest in PEDL143 (Holmwood) to Union Jack Oil, consolidated our position at PEDL299 (Hardstoft) through deals with Shale Petroleum and Upland, acquired an increased interest in PEDL346 (Cloughton) from Shale Petroleum, and sold portions of our interest in PEDL180/182 (Wressle) to Union Jack Oil and now Upland.
“The £1.3m cash consideration from this transaction, together with the £0.6m cash consideration received from the previous sale of Wressle to Union Jack will be used to fund ongoing exploration in the UK and Ireland, including drilling the Holmwood well during 2017, which we rate as one of the best undrilled conventional prospects onshore UK.
"Following this transaction we value our remaining 20% interest in Wressle at £3.7m.
“Europa holds a portfolio of high-quality exploration licences in both onshore UK and offshore Ireland. We continue to advance and monetise our multi-stage portfolio of licences, and in the process generate value for our shareholders.”
After the deal, Europa will have 20% interest in the PEDL180 and PEDL182. Other interest holders are Egdon Resources UK (25%), Celtique Energie Petroleum (33.33%), Union Jack Oil (11.67%) and Upland Resources (UK Onshore) (10%).