Orcadian Energy plc has entered into a non-binding heads of agreement with Rapid Oil Production Ltd to sell its interests in the Crinan and Dandy discoveries.
NON-CORE ASSETS
Mobil discovered Crinan and Dandy in 1987 and 1990 respectively, before they were appraised by Monument in 1998.
Crinan straddles the boundary between Orcadian’s block of 21/28a and Rapid Oil’s block 21/28b, while Dandy lies entirely within 21/28a.
The fields were excluded from the company’s competent person’s report (CPR) contingent resource estimate because they were considered non-core and not material to Orcadian’s overall proposition.
The company, which has undertaken no exploration on the discoveries, included them as “upside potential” in the CPR.
FYNE CLUSTER
Orcadian added that Rapid was progressing the development of the nearby Fyne field, with the intention of obtaining approval for a field development plan this year.
Rapid could bring Crinan into production as part of the Fyne cluster, and potentially be followed by a Dandy tie-back via Fyne, added Orcadian.
TERMS
Subject to completion, Orcadian would receive US$500,000 cash with $100,000 on signing a binding sale and purchase agreement.
The company would also receive $400,000 on approval of a FDP for Crinan, plus a royalty on oil and gas produced spread over the life of Crinan and Dandy, anticipated to be 10 to 20 years.
Rapid will pay an oil price dependent royalty, ranging from 2.5% to 4.0%, for production from the fields.
The two companies have also agreed that Orcadian’s equity share of the Crinan discovery is 60%.
Rapid Oil will additionally pay a 1% royalty to energy data and analytics company TGS ASA.