Shell remains cautious regarding the potential of two onshore oil exploration blocks in Albania despite increasing its stake in the blocks from 50% to 75%, the company said Tuesday.
The deal leaves operator, Canada's Petromanas Energy, with the remaining 25% in blocks 2 and 3.
Petromanas is currently drilling one exploration well and carrying out a seismic acquisition campaign on behalf of the joint venture, Shell said.
"The exploration phase will take a number of years, and it's too early to say anything about the materiality of the portfolio," it said.
Shell in 2012 farmed into blocks 2 and 3, which cover some 852,000 acres, in exchange for payments and carried costs.
"Shell has acquired an additional 25% from Petromanas in the two existing onshore oil and gas exploration blocks in Albania farmed into in 2012. This brings Shell's total equity in the blocks, of which Petromanas remains operator, to 75%," a Shell spokesman said.
Petromanas said in a separate statement that under the terms of the new agreement, Shell would acquire a further 25% interest in the blocks for $22 million.
"Reducing the company's working interest to 25% allows it to mitigate risk and improve financial flexibility," Petromanas CEO Glenn McNamara said in a statement.
"We view Shell's willingness to acquire an additional interest in this asset as an indication of their belief in the prospectivity of blocks 2-3 in Albania," McNamara said.
In 2011, Petromanas said its blocks hold "significant oil resource potential."
McNamara said exploration work at the block continues having reached total depth with its Shpirag-2 well.
"Our understanding of the prospects on Blocks 2-3 continues to evolve through a combination of our own experience drilling the Shpirag-2 well and our partner's insight generated through recent and ongoing work in analog plays in the region," McNamara said.
"The joint venture has determined that the defined exploration program will include three wells and a seismic program with gross spending projected to approach $200 million."
