North Sea operator Orcadian Energy (AIM:ORCA) has announced an agreement for a further extension to its $1.4 million loan repayment to a Shell subsidiary.
Orcadian said Shell International Trading and Shipping Company Limited (STASCO) agreed an extension to 5 July.
Orcadian said it now expects to drawdown around $1.43m to settle the outstanding loan this week to STASCO from its undisclosed partner in the Pilot field.
Upon repayment of the loan, Orcadian will provide the partner with a security over its 18.75% interest in the Pilot field, with the loan intended to be settled from a separate deal on the firm’s Earlham discovery in the Southern North Sea.
Orcadian first announced a proposed farm-in or joint venture arrangement on the licence containing the Earlham discovery in May.
Earlham licence
The North Sea Transition Authority (NSTA) awarded the licence to Orcadian earlier this month as part of the latest tranche of the 33rd licensing round.
Orcadian said the SNS licence contains the Earlham discovery, with a P50 contingent resource of 114 billion cubic feet (bcf) of sales gas.
The licence also contains a potential redevelopment project at the decommissioned Orwell gas field (30 bcf of gas) and the Clover prospect, which Orcadian said has a P50 prospective resources of 153 bcf of gas.
Orcadian previously floated a plan to use the gas licence to feed a floating power station connected to offshore wind infrastructure.
Under the deal, the farm-in partner will acquire an interest in all or part of the licence while Orcadian will remain operator until the assessment phase for the Earlham project is complete.
After that, the partner is expected to become operator to prepare the field development plan (FDP) and deliver the project.
Once the transaction is complete, Orcadian said the partner will pay a fee, still to be agreed, and will fund all of the Earlham and Orwell development costs.
The partner will also pay for the licence work programme and other costs until first gas production, Orcadian said.
Orcadian has granted the partner exclusivity until the end of this year.
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