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Ithaca announce farm-out of the Handcross prospect to Euroil

UK West of Shetlands

17 June 2013

Ithaca Energy Inc. has entered into an agreement with Euroil Exploration Limited, a wholly owned subsidiary of Edison, to farm-out a 25% interest in UK licences P1631 and P1832 (blocks 204/14c, 204/18b and 204/19c), which contain the Handcross prospect. This agreement reduces Ithaca's working interest in the licences from 70% to 45%. Ithaca retains operatorship of the licences.

The Edison farm-out is in exchange for a partial carry of Ithaca's share of the costs of an exploration well on the Handcross prospect. Edison is a major European energy company, with operations spanning the full energy supply chain, including oil and gas activities in Europe and Africa.

Handcross is a Palaeocene prospect located in the Judd Basin in the West of Shetland sector of the UK Continental Shelf. A well is to be drilled on the prospect using the Stena Carron drillship, with operations anticipated to commence in late 2013.

The Edison agreement, in combination with the previously announced farm-out agreement entered into with RWE Dea in April 2013, reduces Ithaca's paying interest in the Handcross well to 6%. This implies a forecast net well cost to the Company of $2.5 million, compared to the net cost prior to the farm-outs of approximately $40 million.

Completion of the transaction with Edison is subject to normal regulatory and third party consents. Following completion, the Handcross partners will be Ithaca (45%, operator), Edison (25%), RWE Dea (20%) and Sussex Energy Limited (10%).

Stellar acted as advisor to Ithaca for the farm-out.