Cluff Natural Resources Plc is pleased to announce that Shell U.K. Limited (“Shell”) has exercised its exclusive option
under the option agreement dated 8 February 2019 between the Company and Shell (the “Option Agreement”) to farm in to Licence P2437.
- Under the terms of the Option Agreement, Shell will receive a 50 per cent. Working interest in Licence P2437, which contains the 291 BCF Selene prospect (P50 Gross Prospective Resources).
- Shell will pay a total consideration of USD$600,000 to the Company following completion, part of which was received in February 2019.
- Completion of the farm in is conditional on the entering into of a Joint Operating Agreement and obtaining regulatory consent from the Oil & Gas Authority (the “OGA”). Application for OGA consent will be made immediately and completion is expected before the end of Q2.
- On completion of the farm in, Shell has indicated its intention to commit to drill an exploration well on the Selene Prospect at the soonest possible opportunity.
- Under the Option Agreement, Shell will pay 75% of the cost of an exploration well, including testing, subject to an aggregate cap of USD$25,000,000.
Commenting, Cluff’s Chief Executive Graham Swindells said:
“We are delighted to be able to continue to build on our relationship with Shell in the Southern North Sea following confirmation that they will now partner with us on Licence P2347, in addition to our existing partnership on Licence P2252, containing the 309 BCF (P50 Gross Prospective Resources) Pensacola prospect (Cluff, 30% working interest).
Shell’s continuing interest in the Company’s portfolio of Southern North Sea prospects is a testament to our licensing strategy and the ability of our technical team to identify, evaluate and communicate the potential of overlooked opportunities within the UK’s mature basins.
The Company now has direct visibility over the future drilling activity of two prospects containing gross P50 Resources of c. 600 BCF of gas. Both opportunities have the potential to create significant value for shareholders whilst reducing the overall exploration risk profile through a portfolio approach.
We look forward to working closely with Shell over the coming months to progress the various workstreams to support the well investment decision.”
Background - The Selene Prospect
- Licence P2437 was awarded to the Company in the UK’s 30th Licensing Round and has an effective date of 1 October 2018 with the first term of the licence running for a period of six years.
- The prospect is imaged by high quality 3D seismic data and is highly analogous with a number of nearby fields including the Shell operated Barque gas field.
- The licence commitments associated with Phase A of the licence have been discharged and the Company will be working with Shell to ensure that exploration drilling on the Licence can take place at the soonest possible time.
- P2437 contains the Selene prospect which is estimated to contain unaudited mean GIIP of 509 BCF (equivalent to approximately 90 mmboe) in a four-way dip closed structure in the Leman Sandstone. P50 Prospective Resources associated with the Selene Prospect are estimated at 291 BCF (or approximately 50 mmboe).
- The Selene prospect is considered low risk with an estimated Chance of Success of 39%.
• The prospect is located approximately 20 kilometres from infrastructure associated with the Barque gas field which ultimately feeds the Bacton gas processing plant.
• A number of other prospects have also been identified on the block which are covered by existing seismic data and will be evaluated in due course.