LONDON (ShareCast) - Europa Oil & Gas has announced a farm-in agreement with a subsidiary of independent exploration and production company Kosmos Energy for two of its licencing options in the South Porcupine Basin offshore Ireland.

Under the agreement Kosmos will acquire an 85% interest and be appointed operator of both licences in exchange for fully funding the costs of a 3D seismic programme on each licence. It will also pay 85% of costs incurred by Europa to-date.

Europa's Chief Executive Hugh Mackay said: "We are very pleased to have secured a respected leading independent such as Kosmos as a farm-in partner and operator for our Irish licences. Kosmos are a highly experienced operator in frontier basins and pioneered the Cretaceous stratigraphic play that has resulted in significant exploration success in the Atlantic margin basins.

"We look forward to working with Kosmos and their involvement is a highly significant first step towards realising the potential value of our exciting prospects in a new hydrocarbon play located in an essentially undrilled basin offshore Ireland.

"The farm-in provides recognition of the substantial potential value lying in our Irish exploration prospects. The work programme associated with the farm-in has the potential to deliver significant value realisation. Europa's retained 15% interest exposes the company to substantial upside in the event of drilling success at either or both of these prospects at a much reduced risk and cost to our shareholders."

If the companies enter into a subsequent exploration drilling phase on one or both of the blocks, Kosmos will also pay 100% of the costs of the first exploration well on each block. These have an investment cap of $90m and $110m, repsectively.

Europa's share price leapt 16.92% to 9.50p by 11:05 Thursday.

NR

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