Operational & Commercial Update
Deltic Energy Plc / Index: AIM / Epic: DELT / Sector: Natural Resources
5 December 2023
Deltic Energy Plc ("Deltic" or the "Company")
Operational & Commercial Update
Deltic Energy Plc, the AIM-quoted natural resources investing company with a high impact exploration, appraisal and development portfolio focused on the Southern North Sea ("SNS"), is pleased to provide a commercial and operational update.
Highlights
· Selene exploration well on track to be drilled in Q3 2024
· Appraisal well planning underway on the Pensacola discovery, with the well scheduled for late 2024
· Site survey work continues ahead of a two well drilling programme in 2024
· Rig selection and contracting process for both wells is ongoing
· Progress continues to be made on processes to realise value on Selene and Pensacola
· Awaiting results of UK's 33rd licensing round
2024 Drilling Programme
The Company is pleased to report that preparatory works for both the Selene and Pensacola wells, due to be drilled in 2024, are progressing according to plan.
Selene
The first of the two wells to be drilled in 2024 is an exploration well on the Selene gas prospect on Licence P2437. The initial geophysical site survey on Selene was completed during the summer and the data acquired used to inform the geotechnical survey which is due to commence in the first half of December 2023. The site surveys are designed to ensure the safe installation of the rig at the selected well location. The site surveys are another key step on the path to drilling this high impact, low risk prospect.
The Selene prospect is considered 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 per cent.
Following completion of the well design process, critical long lead items including casing have been identified and procurement processes are advanced. Accordingly, Selene remains on track to be drilled in Q3 2024.
Pensacola
The oil and gas discovery made by the JV earlier in 2023 and Deltic's subsequent resource upgrade has confirmed Pensacola as one of the most exciting discoveries in the Southern North Sea in recent years. Since then, Deltic has continued to work closely with its JV partners to develop an appraisal strategy for the Pensacola discovery.
The JV is expected to formalise a positive well investment decision in relation to the Pensacola appraisal well in December 2023. Planning for the appraisal of the Pensacola discovery is well advanced and, subject to regulatory approvals, the drilling of the appraisal well on Pensacola remains on track to be drilled after the Selene well in late 2024.
Site survey works focussed on the Pensacola appraisal well location are due to be carried out in the first half of 2024. The rig tendering process for Selene and Pensacola is ongoing.
Having made a significant discovery with its first well at Pensacola, the Company is excited about drilling its next exploration well at Selene, which has the potential to add another significant discovery to Deltic's asset base. Accordingly, we look forward to providing further updates as we progress through the planning phase towards the commencement of operations on both Selene and Pensacola.
Selene & Pensacola - Value Realisation
The Company continues to work on a number of potential options to both realise value and reduce future capital expenditure and has received a considerable level of interest in both Pensacola and Selene from industry. Deltic continues to engage with a number of counterparties in relation to a range of potential transactions on both assets and looks forward to updating the market in due course.
Licence Updates
The Company submitted applications for licences in the UK's 33rd licensing round in January and completed interviews with the NSTA relating to those applications during Q2 of 2023. The process of awarding licences has taken longer than in previous years and as such the Company continues to await the outcome of this licensing round.
Following Capricorn's decision to exit from its exploration assets outside Egypt, the Company had proposed to take forward the two most prospective licences, P2567 and P2428, subject to the North Sea Transition Authority ("NSTA") granting an extension of the current licence terms to allow time to bring in an alternative partner. The NSTA has ruled against an extension to P2567, and this licence was subsequently relinquished on 30 November 2023. The Company may consider reapplying for this licence in the next UK licensing round and, with the benefit of the extensive technical work carried out over the last couple of years, the Company should be well placed to be re-awarded this licence. Deltic continues to seek an alternative partner in relation to P2428 where the current phase of the licence is currently due to end on 31 March 2024.
Financial
The Company's cash position as at 30 November 2023 was £6.1 million, in line with management expectations.
Graham Swindells, Chief Executive of Deltic Energy, commented:
"This continues to be a busy year for Deltic, as we lay the foundations for what will be a very exciting and active 2024. Plans for the drilling programme for Selene and Pensacola are progressing well and we are working closely with our partners to advance and refine those, whilst also progressing options within our portfolio to realise value. We look forward to 2024 as we remain focussed on creating value for our shareholders."
**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) |
Tel: +44 (0) 20 3328 5656 |
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David Hart / Alex Brearley (Corporate Finance) |
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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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Canaccord Genuity Limited (Joint Broker) Adam James
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Tel: +44 (0) 20 7523 8000 |
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Vigo Consulting (IR Adviser) |
Tel: +44 (0) 20 7390 0230 |
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Patrick d'Ancona / Finlay Thomson / Kendall Hill |
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Qualified Person
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
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BCF: |
Billion Cubic Feet
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Estimated Ultimate Recovery or 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
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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. |
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mmboe or million barrels of oil equivalent: |
million barrels of oil equivalent. Gas is converted at 5.98 BCF to 1 MMBOE
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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
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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
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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
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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.
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PRMS: |
the June 2018 Society of Petroleum Engineers ("SPE") Petroleum Resources Management System
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Standard
Estimates of resources have been prepared in accordance with the PRMS as the standard for classification and reporting.
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