Deltic Energy (LON: DELT), the exploration company which has attracted Shell and Cairn in the North Sea, is working up a new 24 million-barrel prospect.
The firm said it has completed initial geological work on Syros in the Central North Sea and has kicked off a farm out process.
Syros lies nearby to the Godwin and Caley fields and, with new seismic over the licence (P2542), Deltic Energy said it has 24.5 million barrels of resources in a best-estimate case, with a 58% geological chance of success.
Deltic said there are numerous local offtake options, including the Arbroath-Carnoustie infrastructure four miles east, and other options like Cayley, Arbroath, Shaw and Gannet within eight miles of the licence.
CEO Graham Swindells said this means it can be “quickly and easily developed” and Deltic considers it a “low risk prospect”.
Deltic has already found farm out success on several of its projects, including two with oil major Shell and five with Cairn Energy.
‘On the verge’ of Pensacola
Deltic Energy gave the update while releasing its half-year results for 2022.
The firm is “on the verge” of drilling the high-impact Pensacola well with Shell in October – targeting 309 billion cubic feet of gas.
The pair had previously said Pensacola, in the Southern North Sea, would be drilled in Q3 of this year using the Maersk Resilient rig.
Deltic, which is yet to reap rewards of its projects, took a loss of just over £1m for the period.
But Mr Swindells was bullish about the firm’s future, particularly given the government’s windfall tax announcement, otherwise known as the Energy Profits Levy.
Windfall tax
He said “although not obvious, Government support for the North Sea is strong”.
Thanks to an investment incentive on the levy, returning over 90% on new investments, Deltic’s prospects are “significantly enhanced”.
He added: “Whilst the much publicised introduction of the EPL in May was not a move Deltic would have supported or felt made a great deal of sense economically, it has however created a significant opportunity for Deltic.
“As an exploration company, Deltic is not subject to the Levy, however, as a company that thrives on partnerships for drilling, the associated introduction of the Investment Allowance, which creates a 90% cost saving on new investment in the North Sea, means that the economics of Deltic’s projects are significantly enhanced such that active companies subject to the Levy will have a greater incentive to invest in new projects and exploration, such as those within the Deltic portfolio.”
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