The
information contained within this announcement is deemed by the
Company to constitute inside information as stipulated under the
Market Abuse Regulations (EU) No. 596/2014 which forms part of
domestic UK law pursuant to the European Union (Withdrawal) Act
2018 ("UK MAR"). With the publication of this announcement via a
Regulatory Information Service, this inside information is now
considered to be in the public domain.
Deltic
Energy Plc / Index: AIM / Epic: DELT / Sector: Natural
Resources
7 February 2024
Deltic
Energy Plc ("Deltic" or "the Company")
Selene
farm-out to Dana Petroleum (E&P) Limited
Deltic Energy Plc, the AIM-quoted
natural resources investing company with a high impact exploration
and appraisal portfolio focused on the Southern North Sea, is
pleased to announce that it has entered into an agreement in
respect of the farm-out of a 25% interest in Licence P2437,
containing the Selene Prospect, to Dana Petroleum (E&P) Limited
("Dana"). This transaction, in combination with the existing
Shell UK Ltd ("Shell") carry, results in Deltic retaining a 25%
non-operated interest in Licence P2437 and having no exposure to
2024 drilling and testing costs up to a cap in excess of current
success case well cost estimates provided by the
Operator.
Highlights
·
Deltic retains a 25% non-operated equity interest
in P2437
·
Deltic to transfer 25% equity in P2437 to Dana in
return for:
o $500K in
cash on completion in relation to back costs incurred by
Deltic
o Dana to
carry Deltic for its residual cost exposure to the Selene well
(after utilisation of the existing carry from the Shell farm-out)
to a value of $5M, and $6M in a success case
o Dana to
pay its 25% share of costs from 1 January 2024
·
Any gross well costs incurred in excess of $40M
(dryhole) or $49M (success case) and any non-well related costs
incurred after the effective date of 1 January 2024 will be split
along equity lines
·
As a result of the Dana carry and the Shell carry
referenced above, Deltic will have no cost exposure to the Selene
exploration well up to $40M (in the case of a dry hole) or $49M (in
a success case) in aggregate
·
The recent estimate of well costs from the Licence
Operator, Shell, indicate a total success case cost of the Selene
well at $47M
·
Completion of the farm-out is conditional on
obtaining consent from Shell and standard regulatory consents from
the North Sea Transition Authority
Well Planning Update
Preparatory works for the Selene
well continue to progress on time and according to plan.
Geophysical and geotechnical site surveys have been completed and
critical long lead items including casing have been ordered.
Procurement processes are also well advanced with the rig contract
for the Valaris 123 having been announced on 5 February meaning
that the Selene well remains on track to be
drilled in Q3 2024.
Graham Swindells, Chief Executive of Deltic Energy, commented:
"We are delighted to have strengthened the P2437 JV with the
addition of an established operator like Dana who have a long
history of successful exploration and development in the Southern
North Sea. As a result of the transaction Deltic retains a material
stake in one of the highest impact UK exploration wells planned in
2024 while effectively eliminating our estimated cost exposure to
the exploration well, which remains scheduled to commence in Q3
2024. I look forward to updating the market as we progress through
a very exciting year for Deltic, including our active and ongoing
process to realise value and farm down our Pensacola
discovery."
About Dana Petroleum
Dana Petroleum is a successful
exploration and production company and wholly owned subsidiary of
the Korea National Oil Corporation. Dana produces in excess
of 40,000 boe/day (2022) from more than 50 licences across the UK,
Netherlands and Egypt. In the Southern North Sea, Dana has a
50% non-operated interest in the Tolmount field which produced
first gas in May 2022 (with Tolmount East in December 2023), and in
late 2023 operated the successful Earn exploration well.
About Selene
The Selene Prospect is one of the
largest unappraised structures in the Leman Sandstone fairway of
the Southern Gas Basin and Deltic estimates Selene to contain gross
P50 Prospective Resources of 318 BCF of gas (with a P90 to P10
range of 132 to 581 BCF) with a geological chance of success of
70%.
As a result of the original farm-out
with Shell, Deltic held a 50% working interest in the Licence but
will be carried for its 25% of the gross costs of drilling and
testing the well on the Selene prospect, up to $25 million. As a
result of its farm out of a 25% working interest to Dana, Deltic
will now be fully carried for its 25% share of gross well costs up
to a total of $40 million (dryhole) and $49 million (success
case).
The Selene well remains scheduled to
be drilled in Q3 of 2024.
**ENDS**
For further information please
contact the following:
Deltic Energy Plc
|
Tel: +44 (0) 20 7887
2630
|
Graham Swindells / Andrew Nunn /
Sarah
McLeod
|
|
Allenby Capital Limited (Nominated
Adviser)
|
Tel: +44 (0) 20 3328 5656
|
David Hart / Alex Brearley
(Corporate Finance)
|
|
Stifel Nicolaus Europe Limited (Joint
Broker)
|
Tel: +44 (0) 20 7710 7600
|
Callum Stewart / Simon Mensley /
Ashton Clanfield
|
|
Canaccord Genuity Limited (Joint Broker)
Adam James / Ana
Ercegovic
|
Tel: +44 (0) 20 7523 8000
|
Vigo Consulting (IR
Adviser)
|
Tel: +44 (0) 20 7390 0230
|
Patrick d'Ancona / Finlay Thomson /
Kendall Hill
|
|
Reporting
Standard
Estimates of resources have been
prepared in accordance with the PRMS as the standard for
classification and reporting.
Qualified Person's Review
Andrew Nunn, a Chartered Geologist
and Chief Operating Officer of Deltic, is a "Qualified Person" in
accordance with the Guidance Note for Mining, Oil and Gas
Companies, June 2009 as updated 21 July 2019, of the London Stock
Exchange. Andrew has reviewed and approved the information
contained within this announcement.
Glossary of Technical Terms
BCF:
|
Billion Cubic Feet
|
Boe
or barrels of oil equivalent:
|
Barrels of oil equivalent. Gas is
converted at a conversion rate of 6,000 Scf per boe
|
Geological chance of success (GCoS):
|
for prospective resources, means the
chance or probability of discovering hydrocarbons in sufficient
quantity for them to be tested to the surface. This, then, is
the chance or probability of the prospective resource maturing into
a contingent resource. Prospective resources have both an
associated chance of discovery (geological chance of success) and a
chance of development (economic, regulatory, market and facility,
corporate commitment and political risks). The chance of
commerciality is the product of these two risk components. These
estimates have been risked for chance of discovery but not for
chance of development
|
P90
resource:
|
reflects a volume estimate that,
assuming the accumulation is developed, there is a 90% probability
that the quantities actually recovered will equal or exceed the
estimate. This is therefore a low estimate of
resource
|
P50
resource:
|
reflects a volume estimate that,
assuming the accumulation is developed, there is a 50% probability
that the quantities actually recovered will equal or exceed the
estimate. This is therefore a median or best case estimate of
resource
|
P10
resource:
|
Reflects a volume estimate that,
assuming the accumulation is developed, there is a 10% probability
that the quantities actually recovered will equal or exceed the
estimate. This is therefore a high estimate of
resource
|
PRMS:
|
the June 2018 Society of Petroleum
Engineers ("SPE") Petroleum Resources Management System
|
Prospective Resources:
|
Are estimated volumes associated
with undiscovered accumulations. These represent quantities of
petroleum which are estimated, as of a given date, to be
potentially recoverable from oil and gas deposits identified on the
basis of indirect evidence but which have not yet been
drilled
|