Hot off its Southern North Sea success with Shell, Deltic Energy (AIM: DELT) said it is progressing plans for a farm out deal on its “drill-ready” Syros prospect by the end of this year.
The development has estimated recoverable reserves of 24.5 million barrels of oil equivalent (P50).
Deltic is 100% owner of Syros, in licence P2542 in the UK’s central North Sea.
The company said it has had “significant engagement with a number of operators” and is “confident” of finding a joint venture partner to progress it.
“The Company is in dialogue with potential counterparties with a view to securing a farm out before the end of this year when a well commitment is required to progress to the next phase of the licence,” it said in full-year 2023 results on Wednesday.
Deltic spent £2.2m developing its portfolio, particularly the Syros and Selene licences, during 2023 as well as progress its Pensacola appraisal plans.
It comes after Deltic successfully farmed out two hot projects– the Pensacola discovery and Selene exploration prospect – to Shell in recent years, with both to be drilled by the Valaris 123 jack-up starting in July.
Drilling and assessment Pensacola recently confirmed it as the largest discovery in the southern North Sea in a decade as 72.6 million barrels of oil equivalent in a gas and oil case.
An appraisal well is what’s planned for it this summer, alongside the Selene exploration well.
Selene is thought to be similar sized at around 53 million barrels of oil equivalent (p50).
Significant headwinds and ‘pre-election rhetoric’
Despite Deltic’s success, chairman Mark Lappin pointed to “significant headwinds” facing the wider industry over the fiscal regime and uncertainty running into the general election.
Labour is promising another change to the windfall tax if it wins power –which would be the fifth tax change for the sector since 2022.
Mr Lappin said: “We and others in our sector are facing significant headwinds in the political environment in which our business operates. Various issues have made energy a key policy area and, heading into an election in the UK, support for our sector appears to have become divided along party political lines.
“Some of this is likely pre-election rhetoric but it has a negative effect on many of our activities and slows decisions with regulators. At Deltic, we remain focussed on moving our assets along the conveyor belt as quickly as possible.
“We and others in the industry are engaging with policy makers across the political spectrum to emphasise the importance of our sector and to show that we at Deltic and colleagues across the sector are ready to play our part in delivering the energy needed, delivering the energy transition and protecting jobs, communities and treasury receipts.
“Our message is simple: we will need oil and gas in our energy mix for decades. A domestic supply is better for jobs, better for treasury receipts, better for energy security and better for emissions compared with imported supplies.”
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