Orcadian Energy PLC on Wednesday said it agreed to dispose of its interests in the Crinan and Dandy discoveries in the UK central North Sea to Rapid Oil Production Ltd.
The North Sea-focused oil and gas development company said it entered into a non-binding heads of agreement with Rapid Oil to dispose of the two ‘non-core’ discovery interests.
Orcadian Energy would receive a cash consideration of $500,000 if this progresses to completion, including $100,000 on signature of a binding sale and purchase agreement and $400,000 upon Crinan field development planning approval, plus a royalty on oil and gas produced from the two fields.
It said the heads of terms are subject to due diligence, UK North Sea Transition Authority consent and finalisation of binding legal documents.
Rapid Oil is reportedly progressing development of the nearby Fyne field, hoping to receive FDP approval in 2023 and could bring Crinan into production as part of the Fyne cluster in phase 2 or 3 of the field development, according to Orcadian Energy.
‘We are delighted to have reached an initial agreement with Rapid Oil, on the proposed disposal of these non-core assets. Rapid Oil are focussed on achieving a development plan approval for Fyne and Crinan and we believe they will be best placed to develop the Dandy fields through the same infrastructure,’ said Orcadian Chief Executive Officer Steve Brown.
‘We look forward to converting these heads of terms into a binding agreement and will provide further updates as negotiations progress; and we look forward to potentially sharing in the cash flow from these discoveries if these fields are developed.’
Hallvard Hasselknippe, CEO at Rapid Oil, added: ‘We are pleased to add the potential of the Crinan and Dandy resources to our field development plan for the Fyne field, this adds approximately 7 million barrels of oil to our contingent resources.’
‘In particular Crinan will be a very cost efficient add-on as it can be drilled from the Fyne Central location.’
Shares in Orcadian Energy were up 21% to 17.55 pence each in London on Wednesday after midday.
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