- Europa Oil & Gas's wholly owned subsidiary has agreed to farm-out a 10% interest in its PEDL180 and PEDL182 licences in North Lincolnshire with Upland Resources (UK Onshore) Limited.

The licences cover the Wressle discovery (PEDL180) and the Broughton North prospect (PEDL182).

- Upland to acquire a 10% working interest in the Licences from Europa for a consideration of £1.85 million comprising an initial consideration of £1.6 million and a contingent consideration of £0.25 million.

- The initial consideration will be met via a payment of £1.3 million in cash and the issue to Europa of 23,076,923 new ordinary Upland Resources Limited shares to the value of £0.3m (at the issue price of 1.3p per share).

- The contingent consideration is subject to certain production milestones being met by June 2025 and will be met by the issue of 19,230,769 new ordinary Upland Shares to the value of £0.25m (at the issue price of 1.3p per share).

- Completion of the SPA is conditional upon inter alia approval from the Oil & Gas Authority and approval of the Wressle Field Development Plan

- Wressle is anticipated to commence production at a gross rate of 500 bopd in early 2017

- Post completion of the transaction, Europa's anticipated net 100 bopd from Wressle combined with existing UK onshore production is expected to increase the Company's overall production to around 220 bopd

- At 220 bopd it is expected that Europa will have a positive cash flow from operating activities at oil prices above US$30 per barrel.

Europa chief executive Hugh Mackay said: "Europa is delivering on its strategy to actively manage its portfolio and realise value for shareholders. So far this year we have farmed out part of our interest in PEDL143 (Holmwood) to Union Jack Oil; consolidated our position at PEDL299 (Hardstoft) through deals with Shale Petroleum and Upland; acquired an increased interest in PEDL346 (Cloughton) from Shale Petroleum; and sold portions of our interest in PEDL180/182 (Wressle) to Union Jack Oil and now Upland.

"The £1.3 million cash consideration from this transaction together with the £0.6 million cash consideration received from the previous sale of Wressle to Union Jack will be used to fund ongoing exploration in the UK and Ireland including drilling the Holmwood well during 2017, which we rate as one of the best undrilled conventional prospects onshore UK. Following this transaction we value our remaining 20% interest in Wressle at £3.7 million.

"Europa holds a portfolio of high quality exploration licences in both onshore UK and offshore Ireland. We continue to advance and monetise our multistage portfolio of licences, and in the process generate value for our shareholders. It is public knowledge that we are in the process of farming out in Ireland where any one of our seven licences and licensing options has the potential to be a company maker for Europa.

"Whilst we do not provide running commentaries on farmout activity the market should feel assured that we are talking to the right parties and seeing strong interest. The recent series of transactions in the UK demonstrates that we are both active in the market and capable of closing deals on attractive terms."

At 1:54pm: [LON:EOG] Europa Oil Gas Holdings PLC share price was 0p at 4.5p

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