Large US oil and gas explorer Kosmos Energy (KOS:NYSE) is walking away from its partnership with micro cap E&P Europa Oil & Gas (EOG:AIM) on two licences in the Porcupine basin offshore Ireland. Predictably Europa is down 20% to 3.1p as its claim that this 'brings opportunity' falls on deaf ears.

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Granted Ireland has just enjoyed its busiest offshore licensing round with 43 applications – three times as many as the previous round in 2011. Also Europa has already benefited from Kosmos' $15 million investment in acquiring 3D seismic over the acreage and its $1.6 billion valuation of a 15% stake in just one of the two licences is several multiples of that at 100%.

However this paper value will never be realised without drilling and that means attracting a new farm-out partner to fund the significant costs of an offshore well. This will be no easy task in the current depressed oil price environment.

House broker FinnCap succinctly sums up the news: 'This is clearly a disappointing result for the company and consequently we are putting our numbers under review.'

Issue Date: 22 Sep 2015