Aug 26

Europa Oil and Gas Holdings Plc, a UK company, is involved in the exploration and production of hydrocarbons in parts of Europe and North Africa including Western Sahara and Egypt. The company pursues a strategy of balancing exploration with production. Core oil producing assets are currently in three UK onshore oil fields. A wide range of exploration and appraisal projects are in various stages of development throughout the company’s targeted geological regions.

According to one of the company’s founders Erika Syba, also the company’s operations director, because exploration is very much regarded by investors as cash consuming, the company from early on made sure to get production into the portfolio to generate income. With the production cash flow, not only the company has increased its exploration portfolio, but also continued with other production asset acquisitions.

Exploration Upside

Another company co-founder is an exploration geologist, one of the reasons the company has assembled a quality portfolio of exploration projects and performed successful appraisal work. Other members in the company’s management team also have prior upstream oil and gas background, which enables the company to continue to identify, acquire and develop profit-making oil and gas assets. The natural gas side seems to be more promising for the company. Europa Oil and Gas Holdings Plc had a significant gas discovery in Romania and appraisal work is ongoing. Another potentially world class gas discovery is in the Aquitaine Basin of France and the company is performing evaluation this year.

Production Increase

In order to support exploration activities, field production has to maintain steady, which requires certain investments itself. Based on company estimates, without adding new production assets, production output can be more than doubled from current level within existing portfolio. However, to increase production capacity, facility upgrade will be needed. Other work may be required on increasing the drawdown of certain reservoirs in order to produce more oil.

Shares of Europa Oil and Gas Holdings Plc (EOG) are listed on the London Stock Exchange’s Alternative Investment Market and were at 13.25p as of 25 August 2010.

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