EnCore Oil mulling new exploration arm

EnCore Oil is mulling floating a new company comprising its exploration assets to raise money for a drilling programme.
 
According to the firm, which would retain a significant stake in the new company, it is looking at optimising value for its exploration portfolio and avoiding further dilution of shareholders' interests.

According to analysts, the spin-off would likely be well received by investors as valuations of both the new firm and Encore would be supported by robust oil prices. The spinoff would also place Encore in a stronger financial position to develop its Catcher and Cladhan discoveries.
 
They add if the company's board approves the plan, the new company would be floated on London's Alternative Investment Market (AIM). They say EnCore would likely retain a 'significant' shareholding. The new firm would raise capital independently for an exploration programme, even as it maintained operatorship of the blocks in question. Its assets would comprise EnCore's offshore UK Continental Shelf acreage, located mostly in the central UK North Sea and its acreage with the most potential would be the acreage surrounding the undeveloped Tudor Rose and Haylock discoveries.

According to EnCore's chief executive, Alan Booth, the arrangement would allow the company to commit all of its current capital towards development assets which include Catcher and Cladhan discoveries, made off the east coast of Scotland and Shetland respectively.

Catcher was billed as the largest discovery in the North Sea for a decade when it was made, in June 2010. The company also holds interests in two undeveloped gas discoveries off Ireland and a potential offshore gas storage project.

The demerged business would raise the capital to fund the drilling at its exploration acreage.