Under the agreement, Total will take a 30.625% stake in Valleys, or Licence P2032, by funding 43.75% of Trapoil's current 50% interest through to the drilling of an exploration well and including 3-D seismic. If no well is drilled by the time the licence expires in 2105, Total has agreed to compensate Trapoil.
The ownership of Valleys will now be Noreco 50%, Total 30.625% and Trapoil at 19.375%. The farm-out arrangement also gives Trapoil an option instead to swap between 10% and 35% of its interest in Valleys for an equivalent stake in Licence P1816, Scaranish, operated by Total.
Mark Groves Gidney, Trapoil’s chief executive, said the deal with Total gives it cost coverage through to a first exploration well on the Valleys, where it is already carried 6.25% by Noreco through to first oil production.
“The farm-out reflects Trapoil's proven strategy of securing valuable carried interests. On completion, this transaction will reduce the company's overall currently committed capital expenditure, across all of its licence interests, to approximately £2mln.
“The option to be involved in the Scaranish prospect offers Trapoil an exciting opportunity to be part of the drilling of a key well in the area. Information gained from drilling this well is likely to be important in unlocking the potential of our nearby Romeo discovery drilled earlier this year."