Nautical Petroleum plc has entered into a farm out agreement with Canamens Energy North Sea Limited (Canamens) whereby Canamens will acquire a 30% interest in the North Sea Block 8/25a.

Under the terms of the agreement, Canamens will fund their ongoing 30% interest of the current well plus a portion of Nautical's costs.

The farm out terms provide for a $20 million cap on the Selkie well expenses against a current estimate of $16 million.

Following the completion of the farm out Nautical will retain a 30% interest and Celtic Oil Limited (wholly owned by SK Energy) will retain a 40% interest. On completion of the well, and subject to partner and BERR approval, Canamens will take on operator responsibility for Block 8/25a.

As announced on the 12 May 2008, Nautical commenced its first exploration well on block 8/25a, which will assess the Selkie prospect.

Following this and previous transactions, Nautical now has an effective 100% financial carry on the current exploration programme on Block 8/25a.

Nautical is also in advanced discussions with Canamens regarding further farm-out agreements on Blocks 9/2b and 3/27a, and related announcements will be made in due course when appropriate.

Tags: Energy North Sea Limited, Nautical Petroleum plc