PA Resources Withdraws from "High-Risk" Danish Licence

Stockholm-listed PA Resources has said that it will not continue its participation in the Danish 9/95 (Maja) Licence given the "high risk" of the prospect.

In a statement released today, the Swedish company said that despite extensions to its other licences in Denmark, it would not be seeking to continue its interest in the Maja Licence. PA Resources currently holds a 26.8 per cent interest in this licence.

The licence, which is operated by Maersk Oil, has been extended by the Danish Energy Agency. However, as part of this extension, the licence-holders are obligated to drill a high-pressure, high-temperature (HPHT) well, a commitment which has motivated PA's withdrawal. The company says it sees this operation as "high risk".

"High cost, high risk gas exploration is not part of PA Resources' core strategy," President and CEO of PA Resources, Bo Askvik said today.

Instead the company will focus on two other licences which have been extended, he said. These licences are the Maersk-operated 9/06 (Gita) Licence and the PA-operated 12/06 Licence. PA holds a 64 per cent stake in the 12/06 Licence, which includes the Broder Tuck gas/condensate discovery and the Lille John oil discovery. Those licences, Mr. Askvik said, were more prospective at lower risk.

"Our primary focus in Denmark is to progress the Lille John oil discovery and Broder Tuck gas/condensate discovery towards development," he said. "We see greater shareholder value in our focus on these discoveries and relatively shallow exploration in Licence 12/06 and our adjacent German acreage."

As a result of the withdrawal from the Maja Licence (following approval from the Danish Energy Authority), PA Resources will take a write-down for that interest. The write-down of approx. SEK 90 million (approximately €10.2 million), will be recorded in the company's results for the second quarter 2012.