Completion of Farm Out of SNS Gas Licences
8 November 2021
Deltic Energy Plc / Index: AIM / Epic: DELT / Sector: Natural Resources
Deltic Energy Plc ("Deltic" or 'the Company')
Completion of Farm Out of Southern North Sea Gas Licences to Cairn Energy PLC
Deltic Energy Plc, the AIM quoted natural resources investing company with a high impact, natural gas focussed exploration and appraisal portfolio in the Southern North Sea, is pleased to announce completion of the farm-out agreement (the "Farm Out Agreement" or the "Farm Out") of five of its gas licences in the Southern North Sea with Cairn Energy PLC ("Cairn") through Cairn's wholly owned subsidiary, Nautical Petroleum Limited.
Following announcement of the Farm Out Agreement on 12 August 2021, Deltic and Cairn have received the necessary regulatory approvals from the Oil & Gas Authority and have entered into joint operating agreements for each of the five licences.
Under the terms of the Farm Out Agreement:
· Cairn has paid Deltic consideration of USD$1 million by way of contribution towards historic back costs.
· Cairn now holds a 60% interest in each of Licences P2428 (Cupertino Area) and P2567 (Cadence) and a 70% interest in each of Licences P2560, P2561 and P2562 which are located between the Breagh and Tolmount Gas Fields.
· Deltic therefore now has a 40% interest in licences P2428 and P2567 and a 30% interest in licences P2560, P2561 and P2562.
· Cairn is funding 100% of an agreed work programme for each of the five licences up to the point of making a drill or drop decision on each licence.
· Following a drilling decision being made on either of P2428 and P2567, Cairn will fund 70% of the costs of whichever well is drilled first, subject to a gross well cost cap of USD$25 million.
· Cairn will now become Operator of each of the five licences.
Since announcement of the Farm Out, the shooting of 3D seismic data over Licence P2428 and surrounding areas, a key component of the work programme, has commenced. ION Geophysical are currently in the process of acquiring approximately 700km2 of seismic data, which is focussed on the Plymouth Zechstein Reef Prospect and will de-risk future drilling. The survey is expected to be completed before the end of November with processed data due to be delivered in the second quarter of 2022.
Graham Swindells, Chief Executive of Deltic Energy, commented:
"Completion of this transformational multi-licence farm out marks the formal commencement of our partnership with Cairn which will see significant investment being made in Deltic's strategic Southern North Sea gas exploration portfolio. Ahead of completion of the transaction we have already begun working with Cairn to progress activities on the licences. I am particularly pleased that the new 3D seismic survey has commenced so quickly after announcement of the farm out, demonstrating a shared commitment to immediately accelerate the development of these licences and hence timeline to potential drilling.
We look forward to building our partnership with Cairn, as we continue to develop our conveyor belt of Southern North Sea gas prospects towards drilling."
**ENDS**
For further information please contact the following:
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Deltic Energy Plc |
Tel: +44 (0) 20 7887 2630 |
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Graham Swindells / Andrew Nunn / Sarah McLeod |
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Allenby Capital Limited (Nominated Adviser & Joint Broker) |
Tel: +44 (0) 20 3328 5656 |
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David Hart / Alex Brearley (Corporate Finance) |
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Kelly Gardiner (Sales and Corporate Broking) |
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Stifel Nicolaus Europe Limited (Joint Broker) |
Tel: +44 (0) 20 7710 7600 |
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Callum Stewart / Simon Mensley / Ashton Clanfield |
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Vigo Consulting (IR Adviser) |
Tel: +44 (0) 20 7390 0230 |
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Patrick d'Ancona / Chris McMahon / Oliver Clark |
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Notes to Editors
Deltic has created a strategically located portfolio of high-quality gas exploration licences in the Southern North Sea over a number of licensing rounds. These licences are located in areas that have been underexplored despite significant discoveries such as Tolmount, Breagh, Pegasus and Cygnus, most of which have gone on to be developed and could provide ready access to export infrastructure for any future developments on Deltic's licence acreage.
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