Fastnet Oil & Gas FAST Award of licensing option in the North Celtic Sea

  Fastnet Oil & Gas (FAST) - Award of licensing option in the North Celtic Sea

RNS Number : 0524R
Fastnet Oil & Gas PLC
14 November 2012




14 November 2012

                            Fastnet Oil & Gas plc

              Award of licensing option in the North Celtic Sea



Fastnet Oil & Gas plc ("Fastnet" or  the "Company") (AIM: FAST, ESM: FOI)  the 
E&P company focused  on near term  exploration acreage in  the Celtic Sea  and 
Africa, is pleased  to announce  that it has  been notified  by the  Petroleum 
Affairs Division of the Irish Department of Communications, Energy and Natural
Resources (the  "Department") that  it  has been  awarded a  licensing  option 
("Licensing Option") of part blocks 49/7,  49/8, 49/9, 49/12 and 49/13 in  the 
North Celtic Sea,  offshore Ireland.  The Licensing Option  commences from  15 
November 2012 until 14 May 2014.



Highlights

§ 18 month licensing option requiring the re-mapping of the area and review of
existing seismic data with value enhancing 3D seismic acquisition anticipated

§ Potential to extend the Licensing Option by a further 18 months subject to a
satisfactory work programme being agreed with the Department

§ Hydrocarbon-bearing sections extend over a gross interval of up to 700  feet 
in early wells drilled by marathon in 1974 and 1986

§ Oil and gas-bearing reservoirs developed at several separate levels



Details of the Licensing Option

The application for the  Licensing Option was made  jointly by Fastnet,  Carob 
Limited ("CRB"), a consultant to Fastnet, and Petro-Celtex Consultancy Limited
("PCX"), a company  established by  Paul Griffiths, now  Managing Director  of 
Fastnet. The Licensing Option acreage lies in water depths of up to 100 metres
in the North Celtic Sea basin. Marathon Oil Corporation ("Marathon")  drilled 
two wells in  the area  of the  Licensing Option  in 1974  (49/13-1) and  1986 
(49/13-2).

49/13-1 tested a shallow anticline generated by Tertiary basin inversion  that 
could be identified at the time on the existing poor quality 2D seismic  data. 
The well encountered oil-bearing Purbecko-Wealden sands over a gross  interval 
of  300  feet,   stratigraphically  equivalent   to  the   hydrocarbon-bearing 
reservoirs tested in the Barryroe oil field to the southwest. The interval was
tested by Marathon but  it did not  flow oil as the  test tool became  plugged 
with sand. Later seismic mapping, based on new 2D seismic acquisition in  1985 
by Ardmore Exploration Limited ("Ardmore"), Marathon's partner in the  49/13-2 
well, showed that the well was drilled significantly downdip from the crest of
the structure.

Marathon and Ardmore  drilled 49/13-2  in 1986  to test  a down-faulted  Upper 
Jurassic structural trap analogous to that successfully tested by Gulf Oil  in 
1983 (49/9-2, Helvick oil  discovery). The well encountered  oil in the  Upper 
Jurassic over a gross interval of approximately 700 feet. Marathon tested  the 
well but failed to flow any significant amounts of oil due to the low  gravity 
of the oil.

The large  vertical extent  of the  hydrocarbon-bearing sections  seen in  the 
above two wells provides encouragement that significant in-place oil resources
may exist within the area of the Licensing Option.



Work program

Fastnet has agreed  a work  program for  the initial  18 month  period of  the 
Licensing Option (the  "Initial Phase")  which is to  reprocess and  interpret 
existing 2D seismic data and to undertake desktop studies designed to  confirm 
the quality and gravity of the oil encountered in both wells and to  determine 
potential reservoir deliverabilities.

Subject to  results, Fastnet  would move  to  agree a  new and  expanded  work 
program with the  Department to  acquire 3D seismic  data during  an 18  month 
extension to the Initial Phase in order to better define the size of the traps
tested by the wells.



Holders of Licensing Option

Pursuant to a participation  and compensation agreement ("Agreement")  entered 
into by Fastnet, CRB and PCX prior to submission of the joint-application  for 
the Licensing Option the holders of the Licensing Option are as follows:

Holder                                       Interest
Fastnet Oil and Gas (Ireland) Ltd (Operator)      85%
CRB                                              7.5%
PCX                                              7.5%



Terms of the Agreement

The Licensing Option was  originally identified by  CRB and PCX.  Accordingly 
and pursuant to the terms of the  Agreement, Fastnet has agreed to pay to  CRB 
and PCX certain  one-off and  consultancy fees both  in relation  to both  the 
making of the joint application and in relation to ongoing technical  advisory 
services. 

In addition, Fastnet has granted  the following warrants over ordinary  shares 
in the capital  of the Company,  which shall  be exercisable for  a period  of 
three years from 9 November 2012 at 17 pence per share:



Holder Warrants granted
CRB           1,333,333
PCX             666,667



In addition, Fastnet has granted CRB and  PCX a total 15% (7.5% each)  carried 
interest, during the  Initial Phase.  The value  of the  carried interest  is 
capped at €30,000 (€15,000 each) for CRB and PCX.

In the event  that, by  unanimous agreement  of Fastnet,  CRB and  PCX, it  is 
necessary to increase the budget for the Initial Phase beyond the €30,000  cap 
for CRB and  PCX then  CRB and  PCX may, at  their sole  discretion pay  their 
proportion of costs  or have their  interest in the  Licensing Option  diluted 
accordingly.

Production bonus

In the event that a  well is drilled by the  parties to this Licensing  Option 
leading to commercial production of oil,  gas and/or condensate, then CRB  and 
PCX shall be  awarded a  production bonus amounting  to the  sum of  €400,000, 
being split €200,000 to each of CRB and PCX.

This production  bonus shall  be  paid by  Fastnet  and/or its  successors  or 
assignees after a period of 12  months following the date of first  commercial 
production.



Cathal Friel,Chairman of Fastnetcommented:

"We are delightedto have strengthened  our portfolio of material prospects  in 
Ireland with the  award of  another Licensing Option  offshore Ireland.  Early 
drilling by Marathon  confirmed the oil  potential of this  area of the  North 
Celtic Sea.  The application  of  new 3D  seismic acquisition  and  processing 
technology is required to  further define the extent  of the structural  traps 
and the likely size of potential oil resources."

For further information, please contact:



Fastnet Oil & Gas plc              +353 (1) 644 0007

Cathal Friel, Chairman


Shore Capital                      +44 (0) 20 7408 4090

(Nominated Adviser & Joint Broker)

Nomad

Bidhi Bhoma

Edward Mansfield



Corporate Broking

Jerry Keen
Davy                               +353 (1) 679 6363

(ESM Adviser & Joint Broker)

John Frain

Brian Garrahy

Roland French


FTI Consulting                     +44 (0) 207 831 3113

Edward Westropp                    









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