Enegi Oil must relinquish land under lease deal

SHARES in Enegi Oil fell yesterday after it announced it would have to relinquish some of the land where it has drilling rights as part of a lease renewal.

The Manchester-based firm is drilling for oil in Newfoundland and has secured a new five-year lease from the region’s authorities – the Department of Natural Resources (DNR).

But under the terms of the deal the firm must relinquish areas not lying over a petroleum pool. The DNR says it will only renew 16km2 from the original 158.8km2.

Chief executive Alan Minty said: “We are pleased that we have secured a five-year renewal over an area that incorporates the PAP#1 ST#3 well which will allow the company to continue to progress its current operations.

“Under the regulations the company is required to relinquish any part of the lease area that does not lie over a producing petroleum pool, and as such a detailed review of the DNR’s decision will be undertaken over the coming weeks.

“The land relinquished on PL2002-01 represents only a small proportion of Enegi’s overall land position and potential in western Newfoundland and we will push ahead with our modelling and planning of future activities.”

Enegi’s shares closed down 12% at 8.9p.