DART Energy (ASX:DTE) has entered a farm-in agreement with one of Europe’s largest gas producers in two of its English tenements.
The agreement with Total E&P UK covers PEDL139 and PEDL140, covering about 240 square kilometres, in the Gainsborough Trough’s Bowland Shale deposit.
The company will pay $1.6 in back payments to DTE, plus invest a further $46.5 million in developing the licences in exchange for 40 per cent ownership.
Total UK joins Egdon Resources UK (14.5 per cent), Island Gas (14.5 per cent) and eCorp Oil & Gas (13.5 per cent) as participants in the licences, while Dart retains a 17.5 per cent stake.
Work will include test drilling and construction of various infrastructure on the site.
Total UK can withdraw from the agreement after spending $19.5 million, but loses all rights to the tenements if it does. Dart will also receive a cash payment of US$1million upon completion.
Dart Chief Executive Officer, John McGoldrick, says the deal is part of a strategy to unlock the potential of DTE’s UK shale portfolio.
“Late last year we entered into a farm-out and strategic cooperation agreement with GDF SUEZ covering thirteen licences, and the Total UK transaction covers another two,” he says in a statement to the ASX this morning.
“Between these two transactions Dart has established partnerships with two leading international oil and gas companies, and will see an extensive shale gas exploration program across its portfolio over the next two to three years – up to six shale wells and total expenditure of up to US$80 million.”
McGoldrick says almost all of the funding will be obtained through farm-outs.
Total UK senior vice president for Northern Europe, Patrice de Vives, says the agreement is an important milestone for the company.
“This opportunity ... opens a new chapter for the subsidiary in a promising onshore play.”
DTE is trading up 10 per cent ($0.012) this morning, at $0.127 per unit.
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