Completion of Farm-out of Licence to Shell U.K.

RNS Number : 7945I

Cluff Natural Resources plc

13 August 2019

 

13 August 2019

Cluff Natural Resources Plc ('Cluff' or 'the Company')

Completion of Farm-out of Licence P2437 to Shell U.K. Limited

Cluff Natural Resources Plc, the AIM quoted natural resources investing company with a high impact exploration and appraisal portfolio focused on the Southern and Central North Sea, is pleased to announce that it has received the required regulatory consent from the Oil and Gas Authority ('OGA') in relation to the farm-out of Licence P2437 to Shell U.K. Limited ("Shell") and that the farm out has been completed.  

P2437 - Farm-out Highlights

·    Following receipt of OGA approval and signing of the Joint Operating Agreement, Shell have been assigned a 50 per cent. working interest in Licence P2437 which contains the Selene prospect.

·    The Company will now receive the balance of the USD$600,000 initial consideration (being USD$300,000) from Shell within 30 days of completion

·    Cluff retains a 50 per cent. working interest in Licence P2437 and will act as Licence Administrator until a well investment decision in made. 

·    Shell has indicated its intention to commit to drill an exploration well on the Selene Prospect at the soonest possible opportunity.

·    Once a well investment decision is made, Shell will pay for 75% of the cost of an exploration well, including testing, subject to an aggregate cap of USD$25,000,000

·    Licence P2437 is located adjacent to existing Shell operated infrastructure and contains the Selene Prospect which is estimated to contain a P50 Prospective Resource of 291 BCF (gross).   

Commenting, Cluff's Chief Executive Graham Swindells said:

"The UK's Southern Gas Basin is coming under increased focus currently with several highly material exploration campaigns ongoing around our acreage. As such, we are delighted to have formally completed this farm out agreement with a committed partner such as Shell, to de-risk and ultimately drill the high-impact Selene prospect."

Background - The Selene Prospect

·    Licence P2437 was awarded to the Company in the UK's 30^th Licensing Round and has an effective date of 1 October 2018 with the first term of the licence running for a period of six years.

·    The prospect is imaged by high quality 3D seismic data and is highly analogous with a number of nearby fields including the Shell operated Barque gas field.

·    The licence commitments associated with Phase A of the licence have been discharged and the Company will be working with Shell to ensure that exploration drilling on the Licence can take place at the soonest possible time.

·    P2437 contains the Selene prospect which is estimated to contain unaudited mean GIIP of 509 BCF (equivalent to approximately 90 mmboe) in a four-way dip closed structure in the Leman Sandstone. P50 Prospective Resources associated with the Selene Prospect are estimated at 291 BCF (or approximately 50 mmboe).

·    The Selene prospect is considered low risk with an estimated Chance of Success of 39%.

·    The prospect is located approximately 20 kilometres from infrastructure associated with the Barque gas field which ultimately feeds the Bacton gas processing plant.

·    A number of other prospects have also been identified on the block which are covered by existing seismic data and will be evaluated in due course.

**ENDS**

For further information please contact the following:

Cluff Natural Resources Plc	Tel: [phone]
Graham Swindells / Andrew Nunn
Allenby Capital Limited (Nominated Adviser & Joint Broker)	Tel: [phone]
David Hart / Alex Brearley / Asha Chotai (Corporate Finance)
Stifel Nicolaus Europe Limited (Joint Broker)	Tel: [phone]
Callum Stewart / Nick Rhodes / Ashton Clanfield
Camarco Ltd	Tel: [phone]
Billy Clegg/James Crothers / Owen Roberts (Financial PR)

Notes to Editors

Cluff Natural Resources is a natural resources investing company listed on the AIM market on the London Stock Exchange (CLNR.L) with a high impact portfolio of operated and, following a farm-out to Shell U.K. Limited in February 2019, non-operated exploration and appraisal assets located within the UKCS's mature hydrocarbon basins.  The Company's diversified portfolio contains near term, infrastructure focussed oil and gas exploration drilling opportunities in both the Central and Southern North Sea together with larger, high impact opportunities in new play types along the northern margin of the Southern Gas Basin.   

The portfolio has a significant P50 prospective resource base in excess of 2.4 TCF (gross, gas equivalent) across a number of prospects with chances of success ranging from 9 to 49%. 

Cluff Natural Resources is focused on extracting much needed gas from the North Sea to supply the UK's energy mix which is currently heavily reliant on foreign supply.  Following a successful farm-out of Licence P2252 and P2437 to Shell U.K. Limited, the Company has commenced 3D seismic acquisition over the Pensacola prospect and is seeking to repeat this farm-out success with its licences awarded in the 30^th Offshore Licencing Round including licence P2352 which contains the Dewar oil prospect.

The Company has a strong institutional investor base and a portfolio which offers a unique opportunity of high quality, low risk and low-cost drilling prospects with potentially high impact results in an area where recent exploration has targeted both mature and new plays and has resulted in large discoveries.

Standard

The technical information contained in this announcement has been prepared in accordance with the March 2007 guidelines endorsed by the Society of Petroleum Engineers, World Petroleum Congress, American Association of Petroleum Geologists and Society of Petroleum Evaluation Engineers Petroleum Resource Management System.

Qualified Person

Andrew Nunn, a Chartered Geologist and Chief Operating Officer of CLNR, is a "Qualified Person" in accordance with the Guidance Note for Mining, Oil and Gas Companies, June 2009, of the London Stock Exchange. Andrew has reviewed and approved the information contained within this announcement.

Glossary of Technical Terms

BCF:                             Billion Cubic Feet 

TCF:                             Trillion Cubic Feet 

GIIP:                             Gas initially in place

Mmboe:                         Million barrels of oil equivalent

Chance of Success:      for prospective resources, means the chance or probability of discovering hydrocarbons in sufficient quantity for them to be tested to the surface. This, then, is the chance or probability of the prospective resource maturing into a contingent resource. Prospective resources have both an associated chance of discovery (geological chance of success) and a chance of development (economic, regulatory, market and facility, corporate commitment and political risks). The chance of commerciality is the product of these two risk components. These estimates have been risked for chance of discovery but not for chance of development.

Prospective resources:  Are estimated volumes associated with undiscovered accumulations. These represent quantities of petroleum which are estimated, as of a given date, to be potentially recoverable from oil and gas deposits identified on the basis of indirect evidence but which have not yet been drilled.

P50 resource:              Reflects a volume estimate that, assuming the accumulation is developed, there is a 50% probability that the quantities actually recovered will equal or exceed the estimate.  This is therefore a median or best case estimate of resource.

 

END

 

 

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