Fastnet the UK and Irish listed E&P company focussed on near-term exploration and appraisal acreage in Morocco and the Celtic Sea, is pleased to announce that it has entered into an amended exclusive option agreement with PSE Kinsale Energy Limited ("Kinsale Energy"), a wholly owned subsidiary of PETRONAS, in relation to the "Deep Kinsale Prospect".
The Deep Kinsale Prospect extends from 4,000 feet subsea below the producing Kinsale Head gas field and is defined by a sub-area (the "Deep Kinsale Sub-Area") of Petroleum Lease No. 1 (see map of the area on the Company's website: www.fastnetoilandgas.com/go/operations/ireland).
Following agreement with Kinsale Energy, Fastnet has secured improved commercial terms from those previously announced on 21 February 2013 and which the Board believes will assist in the current farm-in process. The revised terms include:
· Extension of the Option Agreement to 31 March 2015
· Commitment to commence drilling of a well ("Farm-in Well") extended to on or before 31 December 2016
· Deletion of the Kinsale Energy back-in option,which had allowed Kinsale Energy to increase its interest in the Kinsale Deep Sub-Area by 10%, by paying for 16.667% of the drilling and testing costs of the Farm-in Well
· Removal of Kinsale Energy's right to increase its working interest by up to 15% for no consideration if there is a commercial development, the level of such increase dependent on the level of production
· Upon completion and, if warranted, testing of the Farm-in Well and funding 100% of all drilling and testing costs, Fastnet's net equity interest shall be fixed at 60% working interest in the Deep Kinsale Sub-Area
The assignment of working interest in the Deep Kinsale Sub-Area following completion of the Farm-in Well is subject to the consent of the Minister for Communications, Energy and Natural Resources.
Paul Griffiths, Managing Director of Fastnet, commented, "The new terms of the Deep Kinsale Prospect greatly improve the project economics and significantly improves materiality for Fastnet and any potential Farminee. The extension of the deadline to exercise the option and the commencement of a well works well with our timeline to complete a Farmin transaction from our ongoing process. Fastnet has considerably advanced the technical understanding and de-risked the opportunity at Deep Kinsale based on our extensive interpretation of our newly acquired 3D seismic data (2013). Fastnet has progressed potential farmin discussions with a number of industry players and we seek to close out a transaction with a potential drilling partner for Deep Kinsale and recover substantial past costs to further strengthen our already significant discretionary cash balances."