Terrain owns a 27.8% interest in the Dukes Wood and Kirklington licences in the East Midlands. The wells have been shut in for several years due to water cut and scaling issues making their operation uneconomical at recent oil prices. The operator has been investigating options for repurposing the wells for geothermal heat use which, if suitable, will enable the licence partners to develop a potential source of long term revenue, provide clear ESG benefits and delay or defer the full abandonment and restoration of the wells.
The Eakring area has long been recognised as having an anomalously high geothermal gradient. Initial high level analysis has shown the bottom hole temperature
s at both the Dukes Wood and Kirklington wells are sufficient for multiple industrial and agricultural heating uses with a number of potential end users identified within the vicinity of each site. These income streams could provide a medium to long-term commercial return.
The opportunity is being further evaluated from technical, commercial and regulatory perspectives.
Terrain has sold its 35% interest in the Keddington oil field and 15% interest in the adjacent Louth licence to Union Jack.
During 2019 the Keddington Field produced at a rate of 23 barrels of oil per day which enabled the field to breakeven when the oil price was above $60 per barrel. With Brent Crude slumping to lows of $28 per barrel due to the drop in demand as a result of global COVID-19 lockdowns the licence had become cash consumptive.
A technical review of the field and the surrounding licence suggested that there were some additional reserves which could be produced by further drilling. However, given the disappointing results of the previous well, Terrain considered that the uncertainty was too high to further invest into these assets.
Terrain’s strategy is to focus on optimising its key assets whilst divesting its non-profitable, non-core assets. Terrain sold its interests in Keddignton and Louth (PEDL005(remainder) and PEDL339) to Union Jack for £235,000 (which includes a £35,000 working capital adjustment). Terrain also received its proportion of the abandonment provision in relation to the Keddington well of £70,000 in cash. The effective date of the sale was 30th March 2020.
Evoterra has purchased the entire share capital of Terrain Energy and MicroEnergy Generation Services. The creation of Evoterra brings Calculus’s traditional and renewable energy companies under one umbrella. It is envisioned the merged group will benefit from improved combined performance through resulting synergies and repositioning as a transition energy company thus offering upside potential to all shareholders supported by stable cashflows.
During the cashless transaction, the original shareholders of Terrain and MicroEnergy were hived up to Evoterra Limited. These shareholders now hold shares in Evoterra rather than directly in Terrain and MicroEnergy but Terrain and MicroEnergy still exist as wholly owned subsidiaries of Evoterra and carry out the same trade as previously.
MicroEnergy owns and operates a fleet of 5kW onshore wind turbines in East Anglia which generate stable annuity type revenues largely from the UK’s Feed in Tariff regime.
Terrain Energy is an oil and gas exploration and production company with interests in eight onshore licences in the UK and Germany, including Egmating and Starnberger See where there have been several gas discoveries in recent years.
Terrain Energy acquired the rights to the Bruckmühl and Starnberger See permit fields in the South German molasse basin, south and southwest of Munich, from the British company Bell Exploration in December 2013. The “Bruckmühl” permit expired in November 2014; a new permit field called “Egmating” with a slightly different field outline was awarded to Terrain in its place. Both permits have since been extended and currently run through 30 November 2021 (Egmating) and 30 November 2022 (Starnberger See) respectively.
In compliance with official ministry requirements, a German limited liability company Terrain Energy Germany GmbH was set up in 2019 which represents Terrain Energy’s interests in Germany (although the two German exploration licences are still currently held by Terrain Energy Limited). Terrain Energy Germany GmbH, registered in Munich, is the 100% subsidiary of Terrain Energy Limited.