The Group has a portfolio of exploration permits and applications which have the potential to generate high returns on investment over the medium to long term. The portfolio is focused offshore in the southern Adriatic and Sicily Channel.
Cabot has been active in the Italian oil and gas industry for over 10 years. The Company has offshore permits in the southern Adriatic and in the Sicily Channel, close to the prolific Vega field operated by Edison.
Italy benefits from a well established oil and gas industry that is in a relatively early phase of the industry life cycle when compared to other European peers. The country also has a fiscal system that attracts investment and an extremely good hydrocarbon system that has been proven to work throughout the offshore. The pace of development for the industry in the country has proven to be slower than counterparts due to a lengthy environmental impact assessment process, however when work programmes are approved progress can be made executing the work in a reasonable time frame.
The Company will create three to five significant well events in Italy over the medium to long term to expose shareholders to the possibility of significant upside upon success of any one event.
On 12 February 2019, the Italian government signed a decree which enacts the suspension of work on oil and gas exploration permits or applications for new exploration permits in Italy whilst a review is undertaken. The period given for the review was up to 18 months. The suspension will be lifted as soon as consensus is reached on the terms under which the different areas will proceed with oil and gas exploration. In the event that no consensus is reached within 24 months, the suspension will be lifted.
The Company is prepared to progress its offshore permits as soon as the government’s review has concluded. Cabot’s exploration permits have all been subjected to rigorous environmental reviews and, although no assurances can be given, the Company’s Directors are optimistic for a positive outcome.
Permits F.R39 and F.R40 – offshore southern Adriatic
In the Italian southern Adriatic, the Company has a 100 per cent. interest in two permits, F.R39.NP and F.R40.NP and in five contiguous permit applications. There are three existing oil discoveries within the permits area, Giove, Medusa and Rovesti. There are also a number of leads and prospects, the most exciting of which is the Cygnus prospect, which has 401 mmboe of prospective resource assigned to it. The Company is aiming to acquire 3D seismic over Cygnus and the 26 mmboe contingent resource Giove oil discovery. Based on the results of this seismic data, the Company will then aim to drill an exploration well on Cygnus and an appraisal well on Giove, which now only needs a flow test to surface before a development plan can be finalised.
Subsurface work conducted during 2016 identified that the Medusa deep exploration prospect is analogous to the Giove discovery. As a result, subject to the approval of the Ministry of Economic Development, the Company is proposing to combine the work programmes for permits F.R39 and F.R40. This will allow one well to move both permits into the second licencing period. The Company has received Environmental Impact Assessment (EIA) approval to conduct a 3D seismic programme over the licence areas and a seismic programme is planned for 2019.
Permits C.R146 and C.R149 – offshore Sicily channel
The Company has two permits, C.R146.NP and C.R149.NP, located offshore in the Sicily channel that contain the Vesta exploration prospect along with other smaller exploration leads. The Vesta exploration prospect comprises of platform shoal carbonates with significant hydrocarbon prospective resources and is analogous to the currently producing Vega field, operated by ENI.
The target reservoirs are in the Liassic and Triassic formations within the Streppenosa / Ragusa basin and are located in approximately 120m of water. The basin has a prolific hydrocarbon system, proven in many nearby fields with high quality source rocks and proven, effective seals. Internal estimates consider the mean unrisked prospective resource in Vesta to be 430 mmboe.
The Environmental Impact Assessment approval and drilling permit have been received for the Vesta oil prospect. The permit was applied for by the Company as it is believed that the Vesta prospect extends into C.R149. An exploration permit was previously awarded in July 2014 with a first exploration period of six years. The Company is looking for partners to help progress the work programme offshore Sicily.