It effectively expands Egdon’s footprint offshore North Yorkshire where it already has a project immediately adjacent to P2034.
To begin with, Egdon will just reimburse some of Europa’s past costs, further staged payments will be tied to project milestones - for example, £50,000 would be due upon completion of 3D seismic and £100,000 would come after a first well is drilled.
Some £1.3mln of the potential deal value is specifically tied to future production milestones.
“The sale of our interest in P2304 eliminates our exposure to ongoing costs whilst retaining our exposure to future drilling success,” said Hugh Mackay, Europa chief executive.
“Furthermore, combining P2304 with Egdon’s licence is anticipated to enhance the possibility of delivering farmout success to the benefit of all parties to the transaction.
“Today’s disposal is in line with our strategy to optimise the risk / reward trade off across our onshore UK and offshore Ireland exploration portfolio. We continue to focus on securing farm outs, specifically within our industry leading portfolio of offshore Ireland licences, and I look forward to providing further updates in due course.”
Mark Abbott, Egdon managing director, meanwhile, said: “We are pleased to have acquired this highly prospective acreage at a nominal up-front consideration.
“The licence contains a mapped extension of the Resolution gas accumulation and an additional proven gas discovery.
“We will now work to integrate our evaluation of the new licence into our detailed understanding of P1929 with a view to progressing appraisal of the proven gas resources in the combined area."