27th Oct 2014 09:05
LONDON (Alliance News) - InfraStrata PLC saw its share rise Monday after it said it has signed a deal with Southwestern Resources Ltd, together with its joint venture partners, Corfe Energy Ltd and Brigantes Energy Ltd, which will see Southwestern take a 10% interest in its offshore Dorset licence P1918, in the Western Basin on Southern England.
Southwestern is a new UK-based company set up for the purpose of participating in oil and gas exploration and production in the UK.
InfraStrata said that under the terms of the deal, Southwestern will acquire a 10% interest in the P1918 licence, in return for funding 100% of the next GBP500,000 of expenditure on the licence and thereafter funding its own share. In addition, it has been granted an exclusive option to acquire a further interest in the licence in return for funding future drilling activity, InfraStrata said.
Southwestern has been granted an exclusive option until July 2015 to acquire a further 65% interest from InfraStrata and partners on a pro-rated basis by funding 100% of the costs of an offshore exploration well in the P1918 licence.
InfraStrata is the operator of the P1918 licence with a 54% interest, followed by joint venture partners Corfe with a 19.8% interest, and Brigantes with a 16.20% interest. The remaining 10% will now be held by Southwestern.
If the option were exercised, InfraStrata's net interest in P1918 would be 19%, with its costs carried through the drilling of the well, it said.
The deal is subject to approval from the UK Department of Energy and Climate Change.
"The technical work programme over the next nine months to be funded by Southwestern will better define the discovered oil and gas and prospectivity on the licence. The farm-out is consistent with the company's business plan to secure funding for its exploration programmes by introducing partners and have its costs carried through drilling," said InfraStrata Chief Executive Andrew Hindle in a statement.
InfraStrata shares were up 5.6% Monday morning, at 8.45 pence.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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