Under the deals, Albion Petroleum can earn interests in between three and five UKCS licence areas held by Elixir and its joint venture partner Granby Oil and Gas.

In three of the permits, Albion is eligible to earn a 12.5% interest by funding 25% of the well costs. In Blocks 15/13b and 13/25, the company can earn a 6.25% stake by paying 12.5% of well costs.

Elixir said the first well was planned for drilling later this year in Block 15/13b, which contains the Guinea prospect.

Located about 20km north-east of the Piper oil field, the prospect lies in about 150m of water and is a robust, four-way dip-closed Palaeocene structure that lies on trend with fields such as Balmoral and Dumbarton.

Block 15/13b was awarded as a promote licence to Granby in the 22nd Licensing Round in December 2004. Under an alliance agreement, Elixir was entitled to earn a 35% interest.

“We expect to introduce another farminee party into the Guinea well to further reduce Elixir’s cost exposure,” managing director Russell Langusch said.

“This first well is likely to be drilled in the second half of 2006 and will provide our shareholders with more exploration activity.”