has entered into a binding, conditional farm out agreement with for its North Sea Licences P2252 and P2437. The agreement includes a three month exclusive option.
Cluff's Chief Executive Graham Swindells said: "This partnership is a clear endorsement of the quality of the licences in our portfolio and demonstrates the Cluff technical team's ability to identify and transform overlooked or less understood opportunities.”
He added “We are particularly excited at the prospect of embarking on our partnership with Shell with both parties sharing a commitment to further development in the Southern North Sea.”
“Most importantly, we now have direct visibility over the route to future drilling activity, and the potential to create further significant value for shareholders.”
Shares in Cluff Natural Resources surged 75% following the announcement
Under the terms of the agreement, shell is to acquire a 70% working interest and become the licence operator of Licence P2252 in return for paying 100% of the costs of an agreed forward work programme.
As part of the work programme, 3D seismic data will be gathered and processed for a 2020 well investment decision. The license contains the Pensacola prospect, which is estimated to contain an unaudited GIIP of 566 BCF.
Additionally, Shell has been granted the option to pay $600,000 to acquire 50% of Licence P2437 by 30 April 2019. It contains the Selene prospect, estimated to contain GIIP of 509 BCF.
If the decision is made to drill a well, Shell will pay 75% of the costs up to a cap of $25 million, with any cost over-runs to be shared equally.
The farm out is conditional on the entering into of a Joint Operating Agreement and the obtaining of regulatory consent from the Oil & Gas Authority.
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