“From inception, Sunshine Gas has focussed primarily on medium to long term gas exploration and production opportunities in the relatively low risk region of Queensland, Australia,” the company said in a statement.
“So as to create additional near term upside for shareholders, the company has decided to add a further focus area that has the potential to yield very large oil reserves.”
Sunshine Gas and Hurricane Exploration propose to bid in the 23rd UK Seaward Licensing Round which closes on 9 June. Blocks will be awarded between September and October this year. If the partners’ make a successful application, drilling will
then be planned for 2006-07.
The UK continental shelf is considered to contain one of the best oil source rocks in the world in which reservoirs and seals are well known, according to Sunshine Gas.
“The group will be utilising a highly specialised data interpretation technique to explore for oil,” the company said.
“Using this technique, stress consistent seismic interpretation will allow the group to high-grade opportunities and locate hydrocarbon traps in areas of structural complexity and in unconventional reservoirs.”
Under the heads of agreement, Sunshine and Hurricane will each have a 50% net working interest in the bid and all blocks offered as a result of the bid.
Sunshine will pay and Hurricane its back costs (subject to a cap of £225,000). The two companies will share on-going UK costs in proportion with their respective working interests for three years from 1 July this year.
Hurricane will grant SHG a first right of refusal on a ground-floor basis, proportionate to SHG’s working interest, in any new opportunities delineated by Hurricane in the UK region for that three year period.
Sunshine subject to a capped cost, will fully fund the first appraisal well should the first exploration well on any block granted to the Bid Group, resulting from the 23rd Round Bid, be successful. Subsequent wells and work programs will be funded by both companies proportionate to their respective working interests.
Hurricane will be the operator of the bid group and will be any awarded blocks.