Deltic Energy (AIM:DELT) has been hit with an £18 million impairment in the first half of the year over its withdrawal from the Pensacola licence.
According to the group’s interim results for the six months ended 30 June 2024, Deltic saw its loses widen in the first half of the year, coming in at £1.3 million, compared with a loss of £1.2m in the equivalent period of 2023.
Deltic previously said it would withdraw from the licence due to ongoing political uncertainty around the UK election.
Pensacola was confirmed as the largest discovery in the southern North Sea in a decade, holding around 72.6m barrels of oil equivalent.
The company struggled to secure a farm-out or alternative funding solution for its 30% stake in the licence, blaming “ongoing fiscal volatility and negative political rhetoric” in the lead-up to the UK general election.
Deltic also farmed out a 25% interest in Licence P2437, containing the Selene Prospect, to Dana Petroleum, earning the company £1.1m in cash on completion in relation to back costs incurred by Deltic.
The company recognised a gain of £100,000 on the farm out.
In addition, the company started the year with a cash balance of £5.6m and ended the period to 30 June 2024 with a cash balance of £3.7m.
Deltic Energy CEO Graham Swindells commented: “There is no doubt that the first half of the year has been one of the most challenging periods for the company since its inception, with highly publicised fiscal and political pressures impacting companies operating across the UK’s domestic oil and gas sector.
“Despite these unprecedented headwinds, the company continues to make significant commercial and operational progress, which has resulted in a farm-down to Dana which limits our potential cost exposure to the high impact Selene exploration well which is currently being drilled, as well as the award of two new UK licences located close to key production hubs in the Central and Southern North Sea.
“Despite our necessary withdrawal from Pensacola, Deltic remains in a strong position to extract significant value for shareholders from our existing UK asset portfolio over the coming months and years.”
He added: “While limiting our cost exposure to UK exploration, the company remains committed to continuing its exploration-led growth strategy and is actively evaluating investment opportunities in other jurisdictions where we can leverage our team’s core strengths and where a more supportive approach to the future oil and gas exploration and development prevails.”
Recommended for you
