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Andalas Energy takes 8% stake in Colter discovery

The Colter discovery, off England's south coast, is adjacent to Wytch Farm, the largest onshore oil field in Europe, where more than 450mln barrels of oil have been produced

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Drilling at Colter is due to start in the final quarter of this year

Andalas Energy and Power Plc (LON:ADL) has raised £800,000 to help fund its acquisition of an 8% stake in UK Continental Shelf Licence P1918, which contains the Colter prospect.

The Colter discovery, off England's south coast, is adjacent to Wytch Farm, the largest onshore oil field in Europe, where more than 450mln barrels of oil have been produced.

A previous well at Colter encountered a 10.5-metre oil column and following seismic work in the area the new well will target a location up-dip from the original site.

READ: United Oil & Gas in talks to increase Colter stake

It is scheduled to be drilled later on this year, evaluating a prospect estimated to contain 22mln barrels of recoverable oil.

To earn its 8% interest, Andalas is funding 10.67% of the well’s cost, which is expected to be around £7.5mln. After the first well, it will be obliged to cover 8% of the development costs.

Other partners in Colter include operator Corallian and United Oil & Gas Plc (LON:UOG).

Chief executive Simon Gorringe said the company’s latest acquisition means it has a portfolio of short, medium and long-term value catalysts I the UK and Indonesia.

“With this transaction and recent fund raises we have completed the first phase of the transformation of Andalas into a well-funded and well-diversified oil and gas company,” Gorringe added.

“We are acquiring an interest in a fully funded well, planned for the Q4 2018, which is targeting a significant oil prospect that is attractive due to its significant resource potential and also its proximity to the Wytch farm oilfield and its facilities.”

To raise the £800,000, Andalas issued shares at 1.15p – just below Thursday’s closing price of 1.18p. For every two shares bought in the placing, investors were given a warrant, exercisable at 2p for the next three years.

Shares were broadly flat at 1.17p on Friday morning.

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