EnCore Oil revealed yesterday it could set up a new company for its exploration assets, which include eight North Sea blocks.
The UK-focused exploration and production company would then float the new firm on the stock market.
Chief executive Alan Booth said: “The board has given significant consideration to how we can move our broader asset base forward while at the same time continuing to build on the significant value created to date for shareholders at Catcher and Cladhan.
“While the ongoing appraisal plans for the Catcher block and Cladhan are sufficiently funded, it has become increasingly clear to the board that we need to consider how best to fund our ongoing and expanding exploration portfolio.”
Mr Booth said that the board was examining the option of floating a new company containing the exploration assets, with EnCore retaining a significant shareholding. He said this would maximise the potential value of the exploration portfolio and avoid undue further dilution of shareholder interests by raising additional funds for an extended exploration programme with its associated risks.
Mr Booth added: “The new company would raise the necessary capital to progress a high-impact exploration drilling programme.
“It would be expected that exploration of these assets would be at higher working equity levels than EnCore would have retained, and it is expected that this would also allow the retention of operatorship control which would likely have been lost via individual farm-outs.
“EnCore would remain exposed to any success through our significant shareholding in the new company.”
Mr Booth believed the move would reposition EnCore primarily as an asset-development company with significant exposure to exploration upside, but with the ability to commit all of its current capital towards the development assets.
He said: “EnCore would then be well placed to focus on moving our key assets, the Catcher and Cladhan projects, through to field-development plan stage and possibly beyond, ensuring that our capital is directed towards that goal.”
Mr Booth told the Press and Journal the new company could be set up this year.
EnCore has a 16.6% stake in the Cladhan find in the northern North Sea. The P&J reported last October that it could contain more than 300million barrels of oil.
EnCore owns 15% of Catcher, which is about 110 miles east of Aberdeen. Premier Oil, which has a 35% stake in Catcher, said last month it estimated overall reserves for the find at 40-80million barrels of oil.
London-based EnCore has a workforce of about 15. Its shares closed down 2.85% at 119.25p yesterday at, giving it a market capitalisation of about £350million.