Alba Mineral Resources (ALBA) updated markets on its 11.765%-owned Horse Hill Oil project in the Weald Basin in southern England. The announcement relates to UK Oil & Gas (UKOG) - majority shareholder of Horse Hill Developments, the operator of the Horse Hill Oil project - entering a conditional agreement with Pennpetro Energy (PPP) regarding a farm-in by Pennpetro to the Horse Hill Oil Field on an incremental production basis.
Pennpetro is to fund 100% of a new production well designated Horse Hill-3 (HH-3), to be spudded after the completion of a Pennpetro-funded 12 sq km 3D seismic survey, subject to an aggregate cap of £4.6m.
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The farmout will be largely beneficial to UKOG and Alba, who will retain majority interest in HH-3 without incurring any production costs, as well as retaining 100% ownership and rights to revenues from the HH-1 well. UKOG also noted that planning and environmental consents remained in place for a further 4 production wells at Horse Hill.
The 3D seismic acquisition is currently targeted for H2 2023.
Upon completion of the farmout programme, Pennpetro will earn a 49% share of oil production from HH-3. Pennpetro will also aggregate 49% licenses interest, comprised of an initial 7% upon 3D seismic completion and a further 42% upon HH-3 completion.
The assignment of the 49% licenses interest to Pennpetro is subject to its providing the necessary funds to drill HH-3 and complete the farmout programme within 6 months from the completion of the 3D seismic.
The farmout to Pennpetro is subject to completion of a formal agreement between the parties and regulatory consent from the North Sea Transition Authority for any licences interest assignment.
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