Nautical pulls off clever funding deal

Nautical Petroleum has done an extraordinary deal that effectively cuts the costs of its current North Sea drilling programme by about £700,000 and at the same time lifted its stake in another block, 3/27a at no cost. It has bought a further 25 per cent of block 9/2b – where it is currently drilling on the Kraken prospect – from its parent company for a nominal amount. At the same time, it has farmed out a 25 per cent stake in the same block to a company called Canamens, which will now carry a proportion of all exploration costs on Kraken. Effectively, Nautical’s stake in the block remains unchanged at 45 per cent. As part of the deal, Nautical has lifted its stake in block 3/27a from 45 per cent to 70 per cent. The block is currently being evaluated following a recent seismic survey with results expected in early 2008.

Meanwhile, results of the Kraken drilling are expected towards the end of this month. Nautical shares, now 12.25p compared with a 10p recommendation price here in September, remain a firm hold.