Deltic
Energy Plc / Index: AIM / Epic: DELT / Sector: Natural
Resources
11 March 2025
Deltic Energy Plc ("Deltic"
or "the Company")
Operational
Update
Deltic Energy
Plc, the AIM quoted natural
resources investing company, is pleased to
provide the following operational update in relation to its
portfolio of UK gas development and exploration assets:
Highlights
·
Post-well analysis and pre-Field Development
Planning work on Selene Gas Project underway
·
Selene gas project NPV10 of USD$58M, net to
Deltic, based on updated economic model
·
Selene project - Endymion prospect maturation
demonstrates low-cost upside on block
·
Farm-out process on Blackadder licence
commenced
Selene Gas Project - Licence P2437
Deltic has a 25% non-operated
interest in the Selene gas discovery in the Southern North Sea
("SNS").
Following the successful drilling of
the discovery well in 2024, the Joint Venture ("JV") partners
unanimously supported the move into the second term of the licence
and committed to the various engineering, commercial and regulatory
workflows required to support a Field Development Plan ("FDP") and
a future Final Investment Decision ("FID") in early
2027.
This work has initially focused on
the analysis of data and samples collected from the 2024 well and
integration of this information into the various subsurface and
reservoir models. This process is progressing well, and Deltic
expects significant amounts of data to become available over the
coming months which will enhance the Company's understanding of the
reservoir and provide a higher degree of confidence around
potential future flow rates in a production scenario.
Given the legacy 3D seismic dataset
over the development area was last reprocessed more than 10 years
ago, the JV is considering upgrading the dataset and utilising
modern processing techniques to improve seismic image quality and
refine the structural model up-dip from the discovery well
location. Should the JV decide to proceed with this work, which
would run in parallel to other workflows, it would result in
reprocessed data being available towards the first quarter of 2026
.
Updated Economic
Model
Deltic has revised its internal
economic model for an indicative two well development of the Selene
discovery, with gas export via the existing Barque production
infrastructure, which incorporates updated cost and time estimates
for the development recently provided by the Operator and Deltic's
internal modelling, as follows:
|
Assumptions
|
Units
|
Value*
|
|
Deltic Working Interest
|
%
|
25
|
|
P50 Estimated Ultimate Recovery
('EUR')
|
BCF
|
131
|
|
Initial Field Production
Rate
|
MMscf/day
|
50
|
|
Gas Price
|
pence/therm
|
80
|
|
First Gas
|
Year
|
2029
|
|
Cost per BOE
|
USD$
|
$13 CAPEX
& $16 OPEX
|
|
Fiscal Regime
|
As per
Budget announced
30
October 2024
|
|
Economic Evaluation
|
Units
|
Value*
|
|
Gross Gas Sales
(cumulative)
|
USD$
|
$1.6
billion
|
|
NPV10 (pre-tax, gross)
|
USD$
|
$279
million
|
|
NPV10 (post-tax, net to Deltic)
|
USD$
|
$58 million
|
|
Payback Period
|
Years
|
In year 2
of production
|
|
Internal Rate of Return
|
%
|
35%
|
*Values are estimates based on
Deltic's own internal economic model and have not been subject to
any third-party review.
The Company's sensitivity modelling
demonstrates that the Selene Gas Project is a commercially robust
development. Gas prices utilised in the model represent a
significant discount to both current spot price and long-term
forward gas prices indicating the potential for material upside to
the NPV10 valuation quoted above.
On Block
Upside
Based on data acquired during the
drilling of the Selene exploration well in 2024, Deltic has also
reviewed the prospectivity associated with the Endymion structure
located on the north-eastern corner of the P2437 licence area.
Endymion is a structural extension of the depleted Mimas gas field
and, following recent model updates completed after the Selene well
drilling, Deltic estimates that the Endymion prospect contains P50
Prospective Resources of 70 BCF (with a P90-P10 Range of 45 to 106
BCF) with a geological chance of success ("GCoS") of
>75%.
It is envisaged that the Endymion
structure would be developed via a single subsea tie-back to the
proposed Selene development infrastructure. Any additional gas
produced from Endymion could further materially enhance the overall
Selene licence project economics and could maximise the use of the
proposed Selene infrastructure for a number of additional years. It
is expected that any drilling on Endymion would only occur after
FID on the core Selene development had been secured.
Funding
Options
Deltic is currently evaluating a
number of options, both at the corporate and asset level, which
should allow it to secure the funding required to meet its
medium-term requirements in relation to the Selene development. The
options under evaluation include, but are not limited to, a further
farm-down of Deltic's current equity position in Selene, a partial
sale of its interest in Selene, a pre-payment against future gas
sales, and seeking to add new strategic shareholders to the
Company's register.
This is a key area of focus for the
management team and board as the Company determines the best way
forward for the benefit of all shareholders.
Blackadder - Licence P2672
Deltic has a 100% working interest
in Licence P2672 which is located in a mature area of the Southern
North Sea Gas Basin.
Updated structural mapping completed
by Deltic, incorporating knowledge gained from the Selene
discovery, suggests that the legacy Blackadder prospect and the
Pharos discovery (Well 47/05d-6 drilled in 2013) are likely a
single structure which has been extensively de-risked by the Pharos
well.
Deltic estimates the updated
structure to contain P50 Prospective Resources of 165 BCF (P90 to
P10 range of 66 to 293 BCF) with a GCoS of 65%, with the key
outstanding risks being related to reservoir quality and
producibility.
The proposed forward work programme
will be focussed on improving the quality of existing 3D seismic
data which Deltic believes will enhance its understanding of the
local depositional model and partially de-risk issues around
reservoir quality and refine the Company's volumetric
estimates.
A farm-out process in relation to
this opportunity was launched at an industry event last week.
Deltic expects this process to run over a number of months and
looks forward to updating the market once this process has
concluded.
Dewar - Licence P2646
Deltic has a 100% working interest
in Licence P2646 which is located in the Central North Sea and
contains the Dewar oil exploration prospect. The Dewar licence
remains in 'care and maintenance' mode and, other than nominal
licence rental and NSTA levy fees, the Company expects to incur no
further costs on this licence during 2025.
The subsurface opportunity is well
understood, given legacy work completed by Deltic, and while the
prospect is robust there are significant challenges in terms of
access to export infrastructure. The Company's intention is to
review potential development and export options for this low-risk
exploration prospect again in 2026, before looking to introduce a
partner to help take this project forward.
Andrew Nunn, Deltic CEO, commented:
"The magnitude of the divergence between Deltic's share price
and the Company's valuation of its stake in the Selene Gas Project
is clearly a cause of frustration for both shareholders and the
Board, especially given the quality of the asset and commitment of
the JV partners. The Board considers that actions taken in late
2024 to reduce ongoing G&A costs, and Deltic's previously
communicated year end cash position of £1.4m, provides the Board
with sufficient flexibility to progress potential funding options
to enable the business to move to Selene FID and
beyond.
There has now been a period of stability in the UK oil and gas
industry following the UK Budget in October 2024, and while the
overall environment remains extremely challenging, we believe there
has been a slight improvement in sentiment towards the sector.
Deltic, and in particular our Chairman, have been and will continue
to provide leadership and input into industry-led initiatives to
educate government, ministers and other stakeholders on the
environmental, employment, economic, and energy security benefits
of producing oil and gas from UK waters. As recent events have
demonstrated, it has never been clearer that a secure domestic
energy supply is a vital national asset and Deltic's work could be
a key contributor to delivering that for the UK in the coming
years."
**ENDS**
For further information please
contact the following:
|
Deltic Energy
Plc
|
Tel: +44 (0) 20 7887
2630
|
|
Andrew Nunn / Sarah
McLeod
|
|
|
Allenby Capital Limited (Nominated Adviser)
|
Tel: +44 (0) 20 3328 5656
|
|
David Hart / Alex Brearley (Corporate
Finance)
|
|
|
Canaccord Genuity Limited
|
Tel: +44 (0) 20 7523 8000
|
|
Adam James / Charlie Hammond
|
|
|
Vigo Consulting (IR
Adviser)
|
Tel: +44 (0) 20 7390 0230
|
|
Patrick d'Ancona / Finlay Thomson / Kendall
Hill
|
|
Qualified Person
Andrew Nunn, a Chartered Geologist
and Chief Executive 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.
Standard
Estimates of resources have been
prepared in accordance with the PRMS as the standard for
classification and reporting.
Glossary of Technical Terms
|
BCF:
|
Billion Cubic Feet.
|
|
BOE
|
barrels of oil equivalent. Gas is
converted at a conversion rate of 6,000 standard cubic feet of gas
per BOE.
|
|
Estimated Ultimate Recovery
('EUR'):
|
Estimated Ultimate Recovery is
defined as those quantities of petroleum which are estimated, on a
given date, to be potentially recoverable from an accumulation,
plus those quantities already produced therefrom.
|
|
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.
|
|
MMscf:
|
million standard cubic
feet.
|
|
NPV10:
|
estimated net present value using a
discount rate of 10%.
|
|
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.
|
|
PRMS:
|
the June 2018 Society of Petroleum
Engineers ("SPE") Petroleum Resources Management System.
|
|
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.
|
|
Therm:
|
the energy equivalent of
approximately a hundred cubic feet of natural gas.
|
