Granby Oil and Gas plc, the oil and gas exploration and production company with interests in the UK North Sea and the Philippines, announces that it has reached agreement with ExxonMobil affiliates to acquire a 50% interest in block 49/29b in the UK Southern North Sea containing the Tristan North West gas development subject to acceptance of the licence assignment by the Department of Trade and Industry (“DTI”).
The Tristan North West accumulation contains proven gas, which was discovered in 1987 by the 49/29b-5 exploration well. Tristan North West lies next to the previously produced Tristan field. The Board believes that the accumulation represents an economically attractive opportunity, and is expected to produce in excess of 30bcf, with first gas potentially as early as Autumn 2007 and an economic field life of approximately 5 years.
Mosaic Natural Resources Limited (“Mosaic”) will acquire the remaining 50% interest in the same block, having originally signed a Sale and Purchase Agreement (“SPA”) with ExxonMobil affiliates in 2005 for the entire block. Granby, together with Mosaic, expects to complete the SPA with ExxonMobil affiliates during August 2006 subject to DTI approval.
Granby has provided technical and commercial assistance to Mosaic, including the introduction of a financial partner. Terms have been agreed under which the partner will fund the majority of the cost of the Tristan North West development, which is expected to cost approximately $80m, whilst the partner will acquire at a later date from Granby and Mosaic, a 30% equity interest in the project. The finance is subject to final approval by the partner Board, which is expected to be received at the end of August. Granby and Mosaic will each retain a 35% interest in the project.
David Grassick, Managing Director of Granby Oil and Gas, said:
“Our agreement with Mosaic is an important step towards completing the financing of the Tristan North West development, which will become our second development project, and which has the potential to create significant value for Granby. Granby also has a good portfolio of high quality exploration prospects in the North Sea, and we are making good progress on financing our drilling programme through farm outs.
Bruce Appelbaum, Chairman of Mosaic, said:
“Mosaic is delighted to be working with Granby to bring Tristan North West, our first North Sea project, to fruition. Granby’s subsurface and commercial expertise complements our skills and experience.”