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Highlights:
- Europa Oil & Gas and Antler Global launch search for drilling partner on EG-08 license, with a potential 2.1 trillion cubic feet of gas in Equatorial Guinea.
- Operational focus shifts to Equatorial Guinea and Ireland, while UK production sees challenges at Wressle and Serenity projects.
- Europa adjusts financial year-end amid revenue declines and strategic redirection.
Europa Oil & Gas (Holdings) PLC (LSE:EOG), alongside its partner Antler Global, has embarked on a process to secure a farm-in partner for its EG-08 license area in Equatorial Guinea. This development marks a pivotal move as Europa navigates its 2024 strategy with a firm emphasis on international expansion.
Antler, in which Europa holds a 42.9% stake, initiated the search in the third quarter, eyeing a partner for potential drilling as early as 2025. The EG-08 project, boasting a potential 2.1 trillion cubic feet of gas based on seismic evaluations, is strategically located just nine kilometers from existing gas infrastructure. This proximity could fast-track the project into production if one of its primary prospects proves successful.
In addition to Equatorial Guinea, Europa has renewed efforts in Ireland’s Slyne Basin, where it seeks a partner to explore the Inishkea West prospect. This project, close to Ireland's Corrib gas field, holds an estimated 1.5 TCF of recoverable gas, offering the possibility of an expedited tie-back to existing infrastructure in the event of a discovery. Europa’s license for Inishkea West was recently extended to January 2026, enhancing the project’s appeal to prospective partners.
Back on UK soil, Europa’s Wressle oil field has encountered some production hurdles. Output has dropped to 137 barrels per day from 265 barrels last year due to planned maintenance and increased water content in the wells. To mitigate the decline, Europa plans to increase output by drilling additional wells, pending planning approval. Additionally, the company is working to connect Wressle’s associated gas output to a local distribution network, which could contribute to its revenue stream.
Europa’s shift toward projects outside the UK is also evident in the North Sea, where it allowed its Serenity license to lapse due to fiscal and regulatory uncertainties. Similarly, the company opted out of a new offshore licensing opportunity in the UK, choosing to concentrate on projects with more immediate growth potential, especially in Equatorial Guinea.
Financially, Europa reported a 46% decline in revenue to £3.6 million for the year ending July 31, accompanied by a pretax loss of £6.8 million. This downturn is largely attributed to a non-cash exploration impairment loss of £5 million. At the close of the period, Europa held £1.5 million in cash, which provides a financial cushion as it pursues new ventures abroad.
Reflecting its operational shift, Europa is changing its accounting reference date from July 31 to December 31. This means the current accounting period, which started on August 1, 2024, will now extend to December 31, 2025, aligning Europa’s financial reporting with its longer-term objectives.
With substantial international prospects in Equatorial Guinea and renewed exploration in Ireland, Europa’s strategic pivot appears well-positioned to balance its traditional UK assets with higher-growth opportunities.
