Circle Oil, the Cork-based oil and gas exploration company that is quoted on the Alternative Investment Market in London, has been given approval to renew the exploration permit on its Mahdia licence in Tunisia.

The company said the permit, in which it has a 100 per cent working interest, is being extended three years until January 19th 2018.

The Mahdia permit covers an area of 3,024km and contains the El Mediouni structure which was drilled by the company last year.

Circle said it intends to select suitable partners with whom it can evaluate and develop El Mediouni and other prospects on the permit. The company it has already had initial expressions of interest from a number of oil and gas companies with the financial strength and industry experience to make them suitable joint venture partners.

“The confirmation of this extension of the permit will give interested parties greater certainty in making a formal approach and should greatly assist the company in concluding an agreement,” it said.

“This farm out strategy will minimise Circle’s financial commitment, reduce risk, and still allow the company to benefit from the potential of the discovery. This approach is fully consistent with circle’s strategy to grow the company in a sustainable manner and deliver value to shareholders in a low oil-price environment,” the company added.

Davy said in a note to investors that the permit extension was a positive result for Circle and one that would provide flexibility and optionality to realise the value of the oil discovery made in mid-2014 at the licence.

“Circle Oil is not likely to sole risk the project and will seek to farm out. To this end, its 100 per cent equity position provides material flexibility to attract a partner and still retain a significant interest in the project,” Davy said.

The company, which is focused on oil and gas exploration and production in Tunisia, Morocco, Oman and Egypt, reported revenue of $84.6 million for 2014 in June, down 9 per cent on the previous year. Group operating profit, before write offs and impairments, was down 28 per cent, to $23.3 million. Pre-tax loss for the year was $53.9 million as against a pre-tax profit 0f $28.8 million for 2013.