The well costs include drilling and testing of the 893 billion cubic feet (bcf) Barracuda prospect with any cost over-runs above the $53 million cap to be shared equally between the two companies. Upon commercial hydrocarbon sales, Fuhai will have a preferential recovery right to recover the carry with 45% of it set to accrue interest, capped at 5% per annum from funding until full recovery from asset cashflows.
Holland added: “The signing of the farm-out agreement with Fuhai is the culmination of three years of hard work to first identify the opportunity at EG08 and then, working as one team with Antler, to work up the prospectivity of the EG08 block then to secure an excellent partner to carry us through drilling.
“The farm-in is without question a great result for Europa and equates to a 2.38 for 1 carry which reflects the quality of the asset, namely the high chance of success and the size of the resource potential.”
Europa explains that the interest will be canceled if the Barracuda prospect does not result in a commercial discovery. The deal remains subject to approval from the Ministry for Mining and Hydrocarbons Department of Equatorial Guinea (MMHD) and Overseas Direct Investment (ODI) approval from the Shandong Provincial government.
As a result of the FOA, Antler intends to drill Barracuda at the earliest opportunity, which is expected to be during 2026. As EG-08 PSC is pre-production, Europa recognized a loss of £2,000 in its 2024 Annual Report relating to its interest in Antler, reflecting minor pre-operational costs.
Holland concluded: “2026 is going to be a pivotal year for Europa and I look forward to updating the market as we secure the necessary approvals to conclude the transaction and continue to make progress with our plans to spud the Barracuda well.”