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Shell joins UK junior Cluff Natural Resources in North Sea gas licenses

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Shell joins UK junior Cluff Natural Resources in North Sea gas licenses

Highlights

Anglo-Dutch major to take over at license P2252

Also granted option for 50% stake at license P2437

Combined resources at two blocks some 1.1 Tcf

London — Shell has agreed to join UK upstream junior Cluff Natural Resources at gas assets in the UK North Sea, providing a welcome boost for the development of resources at two license areas, Cluff said Friday.

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Resources at licenses P2252 and P2437 in the Southern North Sea are estimated at around 1.1 Tcf (31 Bcm).

Shell has agreed to take 70% and operatorship of license P2252 -- which contains the 566 Bcf Pensacola prospect -- and an option for 50% in license P2437, home to the 509 Bcf Selene prospect.

"This deal is consistent with our strategy to continually reshape and high-grade our portfolio," a Shell spokesperson said.

"We look forward to partnering with Cluff on these licenses and applying our exploration expertise to help develop this highly promising gas prospect in the Southern North Sea," the spokesperson said.

Shell has taken a number of final investment decisions in the past year for gas developments in the UK offshore, including to develop the Fram, Arran and Shearwater assets.

For Cluff, bringing in Shell will help move its asset developments forward, the company said.

"This partnership is a clear endorsement of the quality of the licenses in our portfolio and demonstrates the Cluff technical team's ability to identify and transform overlooked or less understood opportunities," Cluff CEO Graham Swindells said.

Swindells said the parties shared a "commitment" to the further development of gas assets in the Southern North Sea.

"Most importantly, we now have direct visibility over the route to future drilling activity," he said.

LICENSE TERMS

Under the terms of the agreement for license P2252, Shell will acquire a 70% working interest and be appointed as the license operator in return for paying 100% of the costs of an agreed forward work program.

Cluff will retain a 30% stake.

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The agreed work program includes the shooting of not less than 400 sq km of new 3D seismic data over the Pensacola prospect in the summer of 2019, subsequent processing of new and existing seismic data and sub-surface studies required to support a well investment decision before the end of 2020.

For license P2437, Cluff has granted Shell the option to acquire a 50% working interest by April 30, 2019.

If the option is exercised, Cluff will retain a 50% stake and operatorship.

The license area is located next to Shell-operated infrastructure associated with the Barque gas field, which exports gas into the Bacton Gas Terminal.

-- Stuart Elliott, stuart.elliott@spglobal.com

-- Edited by James Leech, newsdesk@spglobal.com