A small North Sea player has been granted a lifeline loan extension from Shell.
With a cash balance of £95,000, Orcadian Energy (AIM: ORCA) had been due to repay a one million dollar loan and interest to Shell International Trading and Shipping Company (STATSCO) today, but an extension has now been granted until September 13.
AIM-listed Orcadian confirmed its cash balance in a statement today, and has been trying to find partners to help fund its Pilot project in the North Sea.
Orcadian said it is continuing discussions with Shell on a possible further extension of the loan.
The firm was granted a boost this month, with its shares surging more than 100% in the days leading up to August 4.
Managers said they do not know the reason for boost, but pointed to the UK Government’s support for further North Sea licences.
Orcadian Energy said it intends to “elicit offers during 3Q of 2023 so that a new operator can take the project forward”.
It added that Orcadian is in talks “with a number of oil and gas operators” interested in partnering on or acquiring Pilot.
At the start of this month, Orcadian highlighted its financial position, saying a “number of conversations are progressing” with financiers but there can be no guarantee that arrangements will be entered into.
Pilot
Pilot is a 97 million barrel project (following new seismic this year which brought a 20% boost), with 34 wells using a polymer flood technique.
CEO Steve Brown has cited Pilot’s costs at around $1bn, but said there is potential to bring that down through simplification and phasing of project work.
The firm raised £500,000 in February to progress its plans for pilot, but warned of a £140,000 per month “cash burn rate”.
Orcadian received a second extension to its Pilot field licence last year; it is now expected to expire in November.
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