Europa Oil & Gas (Holdings) Plc (AIM:EOG) told investors it has terminated its royalty agreement over the Whisby 4 well, near Lincoln.
BritNRG, the Whisby field operator and license holder, was a party to the agreement, which had not recently generated any income for Europa and would require investment to restart.
It follows an assessment of the technical risks and uncertainties tied to further investment in Whisby, where the well was drilled in 2003.
Europa’s carrying value of the asset was previously written down to nil in Europa’s accounts, and its termination results in no remaining liabilities – so the decision contributes a £185,000 net gain to the company’s balance sheet.
"The Whisby 4 well was drilled in 2003 and since then it has been producing on natural decline to the point where the original net profits interest agreement is no longer profitable for Europa," chief executive Will Holland said in a statement.
“Given the uncertainties associated with any further investment in the Whisby 4 well, the Board decided that our capital is better spent on other projects that offer our shareholders a better value proposition."