Cluff National Resources said Friday it had entered into a farm-out agreement with Shell for the company's Southern North Sea licences paving the way for future drilling activity.
Under the terms of the agreement, Shell would acquire a 70% working interest in licence P2252, with Cluff retaining the remaining 30%.
Shell would be appointed as the licence operator, in return for paying the costs of an agreed forward work programme to support a well investment decision before the end of 2020, the company said.
For the P2437 licence, the company granted Shell the option to acquire a 50% working interest by 30 April 2019 for a total of $0.6m.
If a decision is taken to drill an exploration well on P2437, Shell would pay a share in the proportion of 75% of costs up to a total of $25m with any cost over-runs 'to be satisfied by each party in proportion to their working interest,' the company said.
'We are particularly excited at the prospect of embarking on our partnership with Shell with both parties sharing a commitment to further development in the Southern North Sea, said Cluff's Chief Executive Graham Swindells.
'Most importantly, we now have direct visibility over the route to future drilling activity, and the potential to create further significant value for shareholders.'
The company also gave an update on its other licences, including P2248.
The company said that it would relinquish and seek to re-licence P2248 in the UK's 32nd Offshore Licence round, if a farm out was not agreed and announced by 28 February.
At 8:19am: (LON:CLNR) Cluff Natural Resources PLC share price was +1.85p at 4.55p