NORTH Sea-focused Ithaca Energy has agreed two farm-out deals which it said will help significantly reduce the costs of its exploration programme in the area.
The Aberdeen-based oil and gas firm has farmed out 25% holdings in two licences west of Shetland to a division of Edison, an Italian energy firm which is expanding in the North Sea.
Edison has agreed to pay a share of the costs of a well on the Handcross prospect on the licences.
On its website the company says the North Sea will be the next production cluster in the Edison International exploration and production operations. These range from the Mediterranean to the Falkland Islands.
Ithaca said the farm-out combined with the effects of a deal agreed with RWE Dea in April will reduce its forecast share of the costs of a well planned for Handcross to $2.5 million. That compares with $40m before the deals were struck. The company retains a 6% paying interest in the well but has a 45% stake in Handcross. Ithaca has also agreed to farm out a 50% share of UK offshore licence P2048 to Shell. The oil and gas giant has agreed to cover the costs of obtaining seismic survey data.
Chief executive Iain McKendrick said Ithaca has been joined by high-quality partners across UK exploration assets, adding: "The monetisation of the UK exploration portfolio has far exceeded our expectations in terms of levels of expenditure carry. Ithaca shareholders are now exposed to some potentially high impact exploration at negligible cost."
Last month, the firm agreed a farm-out deal with Shell in respect of assets which it acquired recently through the £203m takeover of Valiant Energy.
Ithaca has said the acquisition of Valiant established the company as a mid cap North Sea oil and gas operator, with proved and probable reserves of approximately 70 million barrels on the industry standard measure.
The company expects to substantially reduce the future UK exploration expenditure commitments that were transferred to Ithaca as part of the Valiant acquisition and to realise substantial cost synergies through the removal of operational and administrative overlaps.
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