Shell Takes Over Cluff’s North Sea License

Graphic for News Item: Shell Takes Over Cluff's North Sea License

Cluff Natural Resources has received Oil and Gas Authority (OGA) approval in relation to the farm-out of License P2252 to Shell and that the farm out has now completed.

Cluff Natural Resources entered into a binding, conditional farm out agreement and a three-month exclusive option with Shell in relation to the company’s Southern North Sea Licenses P2252 and P2437, respectively, in February 2019.

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Completion of the farm out was conditional on entering into a joint operating agreement and the obtaining of regulatory consent from the Oil & Gas Authority.

At the end of April, Shell exercised its option to farm into Cluff Natural Resources’ Southern North Sea License P2437, containing the Selene prospect.

On Thursday, May 30 Cluff said that UK’s OGA had approved the farm-out of License P2252 to Shell.

Following receipt of OGA approval and signing of the joint operating agreement, Shell has been assigned a 70 percent working interest in License P2252 and appointed as License Operator. Cluff retains a 30 percent non-operated interest in License P2252.

Shell will pay 100 percent of the costs of an agreed forward work program to the earlier of December 31, 2020, or the date on which a well investment decision is made.

The agreed work program includes the acquisition of not less than 400km2 of new broadband 3D seismic data over the Pensacola prospect in the summer of 2019, subsequent processing of new and existing seismic data and sub-surface studies required to support a well investment decision before the end of 2020.

3D survey planned for August

Shell has contracted Shearwater GeoServices to undertake the 3D seismic survey using Shearwater’s proprietary FlexiSource technology with acquisition currently scheduled to start in mid-August 2019.

The OGA has approved an extension of the initial term of license P2252 until November 30, 2022, subject to the contingent well commitment becoming a firm well commitment on or before November 30, 2020.

All costs in relation to P2252 following the well investment decision (or December 31, 2020, if earlier) will be satisfied by each party in proportion to their working interest.

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P2252 contains the Pensacola prospect which is estimated to contain unaudited mean GIIP of 566 BCF (equivalent to approximately 100 mmboe).

Commenting, Cluff’s Chief Executive Graham Swindells said: “We are delighted to be able to announce the completion of the farm-out of Licence P2252 to Shell and look forward to the company’s involvement in the upcoming seismic operations during the summer.

“With the option over the Selene prospect also recently exercised, the company now has direct visibility over the drilling activity on two prospects containing gross P50 Resources of c. 600 BCF of gas.”

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