Island Oil & Gas announces two farm out agreements
Island will assign Valhalla Oil and Gas Limited a 20% interest in the Old Head of Kinsale gas field, reducing Island’s interest to 80%, it was announced today.
The deal comes in return for a cash consideration of Stg£2m (€2.93m) plus a 7.5% royalty, which will be determined by a number of factors including field performance.
Under the terms of the separate Connemara farm out option, Netherlands-based Oyster Energy will have the exclusive option to farm in to 10% of Frontier Exploration Licence 1/04, pro-rata from Island and Valhalla, for a cash consideration.
The option must be exercised prior to 31 August 2007. On exercise, Island’s equity would reduce from 61.5% to 55.35% and Valhalla’s from 38.5% to 34.65%.
“These farm out agreements underline our strategy of accelerating key development projects through alliances with strategic industry partners,” said Paul Griffiths, chief executive of Island.
“We look forward to working with Valhalla on this year’s programme at the Old Head of Kinsale; an important step in developing our portfolio.
“We also hope to work in close partnership with Horizon Energy Partners, which has a track record of identifying innovative and cost-effective field development concepts, going forward. We continue to pursue farm out opportunities which enhance the development of our near term oil and gas projects.”
