Small cap oil exploration and production (E&P) play Europa Oil & Gas (EOG:AIM) gains 21% to 5.75p as it agrees a $6m farm out deal with Cairn Energy (CNE) on its 16/9 licensing option offshore Ireland.
SEISMIC MOVE
Cairn is taking a 70% interest in return for funding a seismic survey over the acreage. The deal essentially values the asset at around $8.6m and given the company, currently valued by the market at £13.1m, has six other 100%-owned licences offshore Ireland and is targeting further farm out deals it is little surprise to see Europa advance.
Significantly the deal agreed with Cairn is the first farm out agreement in Ireland's Atlantic sea since 2013.
In 2013 Providence Resources (PVR:AIM) drilled a heavily anticipated well in partnership with US sector giant ExxonMobil on the Dunquin prospect in the Porcupine basin but failed to find commercial quantities of oil or gas, 16/19 is also located in the Porcupine basin..
ACTIVITY IS RAMPING UP OFFSHORE IRELAND
Chief executive Hugh Mackay notes activity in the Porcupine basin is ramping up, with Providence set to drill the Druid prospect in 2017, and says: 'We believe Europa will benefit from any exploration success in the region either as a trail-blazer or fast-follower.'
It is important to note Europa has been here before, agreeing a farm out with US explorer Kosmos Energy in April 2013 which resulted in an even bigger move in the share price before the latter decided to walk away in September 2015.
