() has farmed out 80% of its Midelton/East Kinsale gas prospect to Malaysian state oil company Petronas.

Under the deal, Petronas subsidiary PSE Kinsale Energy will fund the costs of one well on Midelton/East Kinsale with Lansdowne having a free carry.

The Irish group's share of the costs up to US$2.5mln of any testing programme will also be funded by PSE Kinsale, which will take over as operator of the licence once Irish government approval comes through.

Midelton/East Kinsale is situated in the North Celtic Sea, some 20km from the Kinsale Head and Ballycotton gas fields, which are already operated by PSE Kinsale Energy along with the Seven Heads gas fields. 

Before its acquisition by Petronas, PSE Kinsale was Marathon Oil UK, which has pumped gas from the Celtic Sea since the late seventies.

The main target at Midelton/EK is Greensand/'A' formation that produces most of the gas at Kinsale Head and Ballycotton.

Steve Boldy, Lansdowne's chief executive, said he was delighted with the agreement.

"Kinsale Energy's team has a wealth of operating experience and has been producing gas safely from the Kinsale gas field and its satellites since 1978."

"Securing a farm-in partner for Midelton is a critical first step to delivering our objective of a multi-well programme in the Celtic Sea which, in addition to exploration wells, we expect to also include further appraisal/pre-development drilling on the Barryroe oil field".

Shares rose 12% to 12.15p.

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