Fund targets untapped reserves

A SPECIALIST oil and gas private equity fund has invested £10m to fund the exploration of two existing onshore gas discoveries in Lancashire and North Yorkshire

Epi-V has taken a significant stake in Moorland Energy, a company created last year to acquire licences to extract hydrocarbons from surveyed and partially delineated discoveries.

The investment will finance appraisal drilling on two exploration licenses which Moorland Energy has acquired from Warwick Energy.

The sites are located in Elswick, Lancashire, and Wykeham, North Yorkshire.

Moorland has also acquired 10MW of generation equipment from Warwick.

The Wykeham site is estimated to contain significant reserves.

The site at Elswick in Lancashire could contain 11 million barrels of recoverable oil and coal bed methane.

First stage drilling at the sites will commence in the next few weeks.

Moorland Energy is also examining opportunities to acquire further licences for known accessible reserves across the UK and mainland Europe

Gas-fired power is increasingly being viewed as a solution to preventing a shortfall in generation capacity over the coming decade.

Grant Emms, chief executive of Moorland Energy, said: “This deal is the first stage in Moorland Energy’s strategy to acquire and develop existing assets which are either viewed as non-core by larger companies or not being fully exploited by under-capitalised licence holders. Our first two licenses have proven reserves and significant potential enhanced by their strategic location close to existing facilities and most importantly to the National Transmission System.

“By working with Epi-V we’ve not only secured the funding required to make the most of these and other opportunities, we’ve also gained the support of a team which has a huge amount of industry understanding and experience in maximising production.”

John Hutchinson, the partner at Epi-V who led the deal, said: “Domestic hydrocarbon reserves are becoming attractive strategic assets as they will play an increasingly important role in meeting Europe’s energy capacity and security needs.

“Rather than wildcatting, Moorland’s strategy of taking control of proven but undervalued sites ensures that the business has clear sources of revenue generation and therefore significant potential for value creation.

“We will be working closely with the Moorland management team to ensure the maximum reserves are recovered.”

Hampshire-based Epi-V is a £50m fund which was set up in 2007 to invest between £2m and £10m in target businesses which will have significant future value to international oil and gas operations.