Company Report: Europa Oil & Gas
Drilling for oil Europa Oil & Gas has established a portfolio of exploration wells in the UK, Romania and France. Now the company aims to grow production and build its value

Hykeham tophole

Europa West Firsby 7 drilling operations

The oil and gas exploration industry is full of risk, but it’s a risk that Paul Barrett and wife Erika Syba were willing to take when they established Europa Oil & Gas. Following their work as consultant geologists, the couple put together a package of exploration assets and set up the business at a time when oil prices were comparatively low. “When we had built a large enough asset base, we decided to make a break and dedicate more of our time to developing Europa,” explains Syba, now Operations Director.
 
The company drilled its first UK well on the Whisby Oilfield in 2002. Initially, that free flowed approximately 400-500 barrels a day and to date this well has produced over 300,000 barrels of oil.
 
Barrett and Syba took the decision to reduce the amount of debt in the business from the beginning. “Exploration is very much regarded by the financiers as a liability. It doesn’t generate income, it just consumes cash. Consequently, we made a concerted effort to get production into the portfolio early on so we would have the cashflow,” Syba says.
 
“With that production cashflow, we were able to acquire another production asset; the West Firsby Oilfield, which we bought from Tullow Oil in 2004. In the meantime, we continued to increase the exploration portfolio in Romania and we acquired onshore UK exploration assets.”
 
Europa’s focus remains on the onshore market in the UK, Romania and France, which is close to infrastructure and its end-user markets, ensuring the company’s product retains a high value. Romania also has a considerable hydrocarbon legacy with existing oil and gas export routes to western Europe. It was not until 2007 that Europa was granted the Béarn des Gaves Permit in the Aquitaine Basin, in Southwest France, where previous exploration has proven gas in what could be a world-class gas development.
 
BALANCED PORTFOLIO
For Syba it has been important for Europa to create a balanced portfolio. That way, it can remain an exploration company but maintain cashflow from production.
 
In total, Europa produces over 200 barrels a day but Syba and Barrett have plans to increase that. “At the moment we have a plan to get that up to 500 barrels a day by year end and that could be done within our portfolio; we don’t have to buy new assets to achieve that,” she explains.
 
However, this short-term plan will require an investment in the West Firsby site to increase production capacity. “We have a plan to upgrade the ground facilities at our oil field site in Lincolnshire. What we will end up doing there is being able to increase our production by another 20-30 percent once those facilities are finished,” says Syba, adding that this should be completed by July.
 
Similarly, the Crosby Warren site, which Europa bought back in 2006, will require some work to increase the drawdown of the reservoir to produce more oil.
 
Syba emphasises the importance of compliance with health and safety during the upgrade of its facilities, particularly in light of the new regulations that have been brought in. “We need to make sure that all the equipment we use meets the requirements,” she adds.
 
PLANNED GROWTH
Also planned for 2010 is appraisal work on a significant gas discovery at Voitinel, in Romania. Syba explains that they are going back into the well here to fracture the reservoir. “When you open up fractures, you open permeability in the rock, to allow the hydrocarbons to get out faster.”
 
Voitinel was drilled late last year, says Syba, and flowed gas at three million cubic feet a day. “We’re going back into the well to fracture the sand we have already tested to see if it will flow at a significantly higher rate. We will additionally test the sand above that and,” she adds, “the block that well is on has the potential for more than 400 billion cubic feet of gas in it.”
 
Also on the cards this year, is evaluating its Aquitaine gas asset in the Aquitaine Basin of France, which Syba believes could be a “potentially world-class discovery”.
 
“In the long-term, if one or both of these are successful, it is clear the value of the company will be transformed; it will be a much larger value company and with that, we would be looking to make an acquisition.”
 
So the long-term prospects for Europa are promising and certainly the company will be one to watch in the European oil and gas sector in the years to come.
 
Syba is adamant that the company will grow, thanks to Barrett’s skills as an exploration geologist and due to the fact that Europa has a quality exploration portfolio where Barrett can use his expertise.

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