Granby Oil & Gas plc, the oil and gas exploration and production company with interests in the UK North Sea and the Philippines, has reached agreement to acquire TGS-NOPEC Geophysical Company UK Ltd's ('TGS-NOPEC') 11.1% carried interest in UKCS block 42/28c which contains the Watling gas prospect. This agreement increases Granby's carried interest in the block to 33.3%. Granby bid against a number of other companies in an auction arranged by TGS-NOPEC. The consideration, contingent on a commercial discovery, consists of a net royalty of approximately 4% and success fees not exceeding £0.3m.
As previously announced on 31 March 2006, Granby and TGS-NOPEC farmed out Block 42/28c to Centrica Resources Limited ('Centrica') and Gas Plus Italiana SpA ('Gas Plus'). Centrica will be the operator of an exploration well on the Watling prospect. The well will be drilled to a depth of approximately three thousand one hundred metres (3,100m) true vertical depth. Drilling operations are expected to begin in late November or early December 2006. Granby's share of costs (including for this acquired interest) will be carried by Centrica and Gas Plus.
Block 42/28c was awarded as a promote licence to Granby and TGS-NOPEC in the 23rd Licence Round in September 2005. The Watling prospect was identified in a study undertaken by Granby of open acreage in the southern gas basin of the North Sea. The block is located some 35 kilometres east of Flamborough Head in a water depth of approximately 55 metres.
The assignment of TGS-NOPEC's interest to Granby is subject to the consent of the Secretary of State for Trade & Industry.
David Grassick, Managing Director of Granby Oil and Gas, said:
We are delighted to increase our carried interest in the Watling prospect where drilling operations will begin shortly.