EnCore Oil Plc is a UK oil and gas exploration and production company with a focus on exploration and appraisal business supplemented by development and production operations. The company hold licences both onshore and offshore. Most of the offshore projects are on the UK Continental Shelf. The company will also consider deep water interests only in places where its drilling exploration expertise and experience still apply. Onshore projects principally involve appraisal drilling, which balances the risk from high impact offshore exploration drilling, giving the company a carefully constructed portfolio of projects.
Exploration and Appraisal Focus
EnCore Oil Plc’s strategy is to be successful through mostly exploration and appraisal of prospects and discoveries. In selecting operating licences, the company always makes sure that there is an evaluation momentum in place, that is, pursuing only acquisitions of commercially proved reserves. The clear goal is to achieve future major capital growth. Being an operator in some of the projects itself, the company is in a better position to carry out such a mission. Out of the eleven wells that the company has drilled since 2007, eight of them were successful. Another two wells, one for appraisal, have been planned for 2010.
Farming Out and Early Exit Approach
Since development and production is not a main concern for the company, EnCore Oil Plc adopts a unique approach of early exit and aims to farm out some of its high-equity licences through exchanging for other projects or for excess to drilling rigs to advance the evaluation process without incurring further capital investments. And once an evaluation programme is in place, the company is ready for others to take over and so it can move on to the next opportunity. To do that, the company carefully assesses the best time for divesting or swapping its interest in any successful project. Deciding the appropriate time in a project’s life cycle involves the considerations of future capital requirements and its sources, as well as a remaining risk profile.
Shares of EnCore Oil Plc (EO) are listed on the London Stock Exchange’s Alternative Investment Market and were at 54.75p as of 30 July 2010.