Deltic Energy (AIM: DELT) is mulling a farm-down of its stake in a pair of Shell-operated (LON: SHEL) North Sea targets and have received “a considerable level of interest”.
The two firms plan to drill an appraisal at Pensacola next year after a well decision this month, already considered one of the largest gas discoveries in the Southern North Sea for over a decade.
They will also drill a fresh exploration well at Selene in Q3, considered “one of the largest unappraised structures” in the Southern North Sea.
AIM-listed Deltic said it is working on options to “realise value and reduce future capital expenditure”, with interest in both Pensacola and Selene.
“Deltic continues to engage with a number of counterparties in relation to a range of potential transactions on both assets and looks forward to updating the market in due course,” the company said in a statement.
Pensacola and Selene
© Supplied by Deltic EnergyPensacola was confirmed as a crucial discovery in April and had a major resource upgrade in summer to hold best-case estimates of 342m barrels of oil equivalent.
Deltic is 30% owner of the licence, partnered with operator Shell which holds the remaining 70% following a farm out deal in 2019.
Selene meanwhile has estimated gross P50 prospective resources of 318 billion cubic feet of gas, with a geological chance of success of 70%.
Deltic has a 50% working interest in the well, though Shell is covering 75% of the costs of drilling and testing up to $25m under their farm out deal.
Licences
Elsewhere Deltic said it had applied for licences in the UK’s 33rd licensing round in January and completed interviews in Q2.
It said the North Sea Transition Authority (NSTA) process of awarding those “has taken longer than in previous years and as such the Company continues to await the outcome of this licensing round”.
After partner Cairn Energy decided to exit exploration outside of Egypt, Deltic wished to retain two of the most prospective licences – P2567 and P2428.
However the NSTA ruled against a necessary extension to P2567 to allow time to bring in an alternative partner and it was relinquished.
Deltic has until March 31, 2024 for P2428 in its current phase and continues to seek an alternative partner.
CEO Graham Swindells said: “This continues to be a busy year for Deltic, as we lay the foundations for what will be a very exciting and active 2024.
“Plans for the drilling programme for Selene and Pensacola are progressing well and we are working closely with our partners to advance and refine those, whilst also progressing options within our portfolio to realise value. We look forward to 2024 as we remain focussed on creating value for our shareholders.”
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