Orcadian Energy has signed a new deal with energy data group TGS, which will see it gain access to 3D seismic data across several of its licences in return for a share of future production royalties.
Orcadian said the agreement will grant it access to some 2,070 square km of newly reprocessed and interpreted 3D seismic data covering the bulk of its licences on the Western Platform, including Blakeney, Catcher and Catcher North.
The Blakeney survey, shot in 2012 and reprocessed in 2019, covers all of blocks 21/22a, 21/26a, 21/27a, and 21/27b, of which Orcadian has already licensed 205 square km to enable interpretation of Pilot, Blakeney, Bowhead, and Feugh.
In addition, the deal includes access to the 2012/13 Catcher North survey covering all of licence 21/28, and the 2011 Catcher survey covering all of 28/3a.
Access to new seismic data will also enable evaluation of nearby open acreage as part of the upcoming 33rd round, Orcadian said, and ensures it has the best data available to evaluate the “multitude of development opportunities and prospects” in its portfolio.
Under the terms of the deal, TGS has agreed to defer a significant portion of seismic licensing fees due under the existing licence arrangements until the approval of a field development plan (FDP) for Orcadian’s flagship Pilot project, a 79-million-barrel field around 90 miles east of Aberdeen.
In return, Orcadian will grant TGS a 1% royalty on proceeds from future production from its Western Platform licences.
Subject to a Pilot FDP approval, TGS has also agreed to acquire at least 100 square km of new seismic over the Narwhal and Elke prospects in and help deliver interpretation and seismic modelling over the area.
Following an FDP approval, and concurrent with the agreements for new Elke and Narwhal data, Orcadian will pay its outstanding financial commitment to TGS.
Orcadian said these terms were designed to offer it “maximum flexibility in future fund-raising” to stimulate development of the field as a UK energy hub.
Meanwhile, it said the North Sea Transition Authority has agreed to amend its work programme for Licence P2484, to show that new seismic acquisition would satisfy the company’s work commitments on the licence.
Accordingly, Orcadian has formally requested that P2484 continue into Phase B.
The AIM-listed firm is currently seeking a farm-in partner for Pilot, and announced this week that its roughly $1bn development costs could be slashed by up to 75% after tax, in the wake of the investment incentives offered as part of the UK government’s windfall tax last month.
Commenting on the new arrangement with TGS, chief executive Steve Brown said: “We are delighted to have reached this agreement with TGS and look forward to further cementing our close working relationship.
“We are delighted that TGS have the confidence in our project to enter into this deal under which the vast majority of their return will depend on us successfully taking the project into production.
“We now have licensed, what we believe is the highest quality data across all of our Western Platform licences, whilst minimising value dilution to our shareholders.”
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