Financial terms of the transaction have not been revealed by the parties.

The farm out transaction will see Siccar Point retain a stake of 33.33% in the two blocks which contains the Lyon prospect.

On the other hand, Ineos will own the remainder stake of 66.66% in each of the licenses.

For Ineos, the transaction complements its portfolio of producing assets and discoveries located West of Shetland, which are part of its recent $1.3bn acquisition of Dong Energy's upstream oil and gas business.

The transaction leaves it with stakes across the Lyon, Tobermory, Bunnehaven and Cragganmore fields that make up the Lyon cluster. Put together, the four fields are estimated to have 3-5 trillion cubic feet of gas in place.

Ineos believes that it has a huge opportunity to draw gas from the most northerly area of the UK continental shelf, located 150km of the Shetland Islands in the north direction.

Ineos Oil & Gas CEO Geir Tuft said: “Ineos intends to become a significant player in this area.  This deal confirms our aim to take a leading role to develop the Northern Gas Fields using the significant infrastructure investments already made West of Shetland.”

“With the purchase of the DONG E&P business earlier in the year, Ineos took over a significant portfolio of producing assets and discoveries West of Shetland.”

Expected to hold 1-3 trillion cubic feet recoverable gas, the Lyon prospect if successful could be large enough to create a new gas-hub development in the lines of the Laggan-Tormore fields, stated Ineos.

Siccar Point Energy CEO Jonathan Roger said: “As licence operator we are excited to be moving forward in conjunction with Ineos to drill the Lyon prospect.

“This represents an opportunity to unlock the material gas potential of the most northerly licenced area of the UKCS.”

Ineos revealed that Tobermory, Bunnehaven, Cragganmore and other existing gas discoveries in the Lyon prospect would all be possible to connect into a Lyon gas hub.

Closing of the transaction will be subject to customary regulatory clearances.

Image: Siccar Point will be joined by Ineos in its Northern Gas Fields’ licenses. Photo: courtesy of Siccar Point Energy Ltd.