North Sea firm Deltic aiming to raise £15m to cover costs and fund investment

London-listed Deltic Energy (LON: DELT) has announced plans to carry out a fundraise in order to support its ongoing and future activities.

The North Sea oil and gas company intends to conduct an equity fundraise consisting of a share placing and subscription, targeting a minimum of £15 million.

It also plans to hold an open offer – whereby its existing backers can increase their stake – aiming for up to an additional £2m.

A price of 3.5 pence per share has been set for both processes.

Selene, investment, and licensing round

Deltic, formerly Cluff Natural Resources, is trying to raise £15m to pay for its share of Selene.

A decision was recently taken by the firm, alongside partner Shell, to invest in the high-impact exploration well in the UK North Sea.

Proceeds will also be used to fund further investment in Deltic’s existing licence portfolio, allow it to prepare for the upcoming licensing round, and cover transaction costs, working capital and general corporate costs through to mid-2024.

The process

Stifel Nicolaus Europe and Canaccord Genuity are acting as joint bookrunners to Deltic in connection with the fundraising.

The placing is being conducted through an accelerated bookbuilding process, which allows the firm to gauge interest from investors.

It is being launched immediately, will be made available to eligible institutional investors, and is expected to close no later than September 13.

Deltic’s largest shareholders IPGL and Inthallo have already indicated their intention to participate in the fundraising, with plans to invest £5m and £1.5m respectively.

Certain directors and members of the company’s senior management team have also signalled their want to get involved.

The fundraise is subject to approval at a General Meeting, expected to be held at the end of the months.

Deltic’s portfolio

Deltic has stakes in a number of Southern and Central North Sea fields, with a significant weighting towards natural gas.

Drilling at the high-impact Pensacola, operated by Shell, is expected to kick off next month using the Maersk Resilient rig.

Prospective resources are estimated at 309 billion cubic feet of gas, with a geological change of success of 55%.

Deltic is also partnered with the oil giant on the Selene well in the Southern North Sea, which expected to spud within the next 12 to 18 months.

© Supplied by Shell

It follows a final decision taken by the two firms in July to invest in the field, which has prospective resources of 318 billion cubic feet of gas.

Alongside Capricorn Energy, formerly called Cairn, Deltic is working across five jointly-owned Southern North Sea licences.

They are looking to mature well prospects, with a view to making a first well investment decision in 2023.

Meanwhile, Deltic is on the hunt for a partner for its Syros prospect in the Central North Sea, and has kicked off a farm-out process.

North Sea licensing round

Looking ahead to future opportunities, the company has kicked off preparatory work ahead of the UK’s 33rd Offshore Licensing Round.

Prime Minister Liz Truss confirmed plans last week to dish out new North Sea permits as part of a drive to bolster gas supplies.

It is forecast to be launched in Q4 2022.

Deltic aims to build on its “successful track record” and “further strengthen and diversify its portfolio through applications”, on both a 100% basis and in collaboration with selected partners.

Graham Swindells, chief executive of Deltic Energy, said: “This is a very exciting time for Deltic as we will shortly be drilling of our Pensacola Gas Prospect and continue to progress, and add to, our conveyor belt of opportunities, not least our Selene Gas Prospect, which we look forward to commencing drilling within the next 12-18 months.

“Given the tragic events in Ukraine, the importance of having a secure supply of domestic gas from the UKCS has never been more evident, and Deltic is focused on becoming a key contributor to delivering that gas.”