The Denver-based oil company, Magellan Petroleum, is looking to sell its interests in exploration licences and drilling plans in the Weald in southern England.
Magellan has a 50% stake in three PEDL licences in West Sussex and Hampshire and a well site at Broadford Bridge near Billingshurst. It also has a 35% stake in Horse Hill Development Ltd, which owns the Horse Hill well near Gatwick Airport.
In a filing this week to the US Securities and Exchange Commission, Magellan said it was “actively seeking to monetize its interests” in the Weald basin licences PEDLs 231, 234 and 243 and its interest in the Horse Hill well.
Magellan said this was part of a strategy to help merge its entire operation with another company. It said converting the Weald assets into cash would make the company more attractive in a potential merger.
“The potential sale of the Company’s interests in the Weald Basin and the related settlement of its litigation with Celtique Energie would further enhance the Company’s profile by reducing the uncertainties associated with those interests.”
It also predicted that the sale could be quick.
“The company believes that the receipt of proceeds from the monetization of the above-listed assets could be accomplished in the relatively near future”.
Legal dispute over Broadford Bridge
For more than a year, Magellan has been involved in a legal dispute with Celtique Energie, the co-owner of the Weald licences, over the funding of the Broadford Bridge well site. The companies have made claims against each other in the High Court, delaying the operation to drill the well, originally planned for Spring 2015.
The Weald licences had been due to expire in June 2016. But under an agreement with the Department of Energy and Climate Change, PEDL 234 and 243 would be extended to 2019 if the companies drilled Broadford Bridge.
In the SEC filing, Magellan confirmed the licences were due to expire at the end of June because the commitment to drill the Broadford Bridge well had not been met.
It also said that although the flow tests at Horse Hill were encouraging “material risks remain before the well can be assessed as a producing well and reserves estimated”.
Refusals of permission
In 2014, Celtique Energie was refused planning permission for an exploration well in PEDL 231 at Fernhurst in the South Downs National Park. The same year it was refused consent for another well nearby at Boxal Bridge, between the villages of Wisborough Green and Kirdford.
Celtique appealed against the refusal of the Wisborough Green-Kirdford application. A public inquiry was due to decide the application in September 2015. But six months before the start Celtique pulled out of the appeal. It said the reason was a delay in the start date of the public inquiry. By the time the result was known, it said, there would not be enough time to drill the well before the PEDL term expired.