Nautical Petroleum plc (AIM), the developer of heavy oil interests on the UKCS and mainland Europe announces that it has entered into a farm out agreement with Canamens Energy North Sea Limited (“Canamens”) whereby Canamens will acquire a 30% interest in the North Sea Block 8/25a.
Under the terms of the agreement, Canamens will fund their ongoing 30% interest of the current well plus a portion of Nautical’s costs.
The farm out terms provide for a $20 million cap on the Selkie well expenses against a current estimate of $16 million.
Following the completion of the farm out Nautical will retain a 30% interest and Celtic Oil Limited (wholly owned by SK Energy) will retain a 40% interest. On completion of the well, and subject to partner and BERR approval, Canamens will take on operator responsibility for Block 8/25a.
As announced on the 12 May 2008, Nautical commenced its first exploration well on block 8/25a, which will assess the Selkie prospect.
Following this and previous transactions, Nautical now has an effective 100% financial carry on the current exploration programme on Block 8/25a.
Nautical is also in advanced discussions with Canamens regarding further farm-out agreements on Blocks 9/2b and 3/27a, and related announcements will be made in due course when appropriate.
Commenting on the farm out to Canamens, Steve Jenkins Chief Executive Officer of Nautical said:
“The farm out on block 8/25a is excellent news for Nautical shareholders, as this mitigates ongoing risk in the portfolio and maintains our cash balances.”
“The discussions with Canamens endorse the quality of our assets, confirm the continuing support for Nautical’s strategy on the UKCS, and will align our interests in a number of key exploration blocks.”
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