Valiant Petroleum (LON:VPP) , the oil and gas group active in the UK North Sea, has moved to bolster its exploration pipeline by agreeing a deal to acquire a 30% stake in Block 29/1c containing the Orchid prospect. Valiant is buying the interest from Summit Petroleum Ltd in return for carrying a share of the cost of the initial exploration well. Summit, the operator, is currently seeking a semi-submersible rig to drill the prospect in the second half of the year. The news came on the same day as Valiant reported full year revenues of $176.9m against $53.4m last year and a fivefold increase in pre-tax profits to $51.6m.

The Orchid prospect is a four-way dip closure in the Tertiary and Chalk horizons and lies in the Central North Sea surrounded by the producing Banff, Kyle, Bittern and Gannet group of fields. It is located adjacent to acreage that Valiant last month agreed to acquire from Sterling Resources (TSX-V:SLG), which contains a similar prospect and two smaller appraisal opportunities. Under the terms of a series of agreements involved in that deal, Valiant is farming-down and swapping part of its 100% holding in blocks 210/29c and 210/30b, which contain the Cladhan South prospects. They sit directly to the south and east of the existing Cladhan discovery, which is operated by Sterling and involves EnCore Oil (LON:EO.) as a 16.6% stake holder.

As a result, Valiant will hold a 30.0% interest in Cladhan South promoted for the full cost of an initial exploration well, subject to an agreed cap on promoted costs. In return, it will take a 40.0% interest in Blocks 21/30f and 22/26c in the Central North Sea, which were offered for award to Sterling in the most recent 26th UKCS licensing round. They contain a number of exploration and appraisal opportunities. Sterling is currently seeking a rig slot for the second half of 2011 in order to drill Cladhan South as part of its exploration and appraisal programme in the area this year.

In January, Valiant’s first exploration well of 2011 resulted in a hydrocarbon discovery on the ‘E’ area of the Don Southwest field, where it holds a 40% stake. Together with West Don, where it has a 17.275% holding, the two fields last year gave Valiant average production rates in excess of 7,400 barrels…

Unlock the rest of this article with a 14 day trial

Unlock with Email
Unlock with Google

Already have an account?
Login here