TIDMDELT
RNS Number : 3752I
Deltic Energy PLC
12 August 2021
The information contained within this announcement is deemed by
the Company to constitute inside information for the purposes of
Regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations
2019/310. With the publication of this announcement via a
Regulatory Information Service, this inside information is now
considered to be in the public domain.
12 August 2021
Deltic Energy Plc / Index: AIM / Epic: DELT / Sector: Natural
Resources
Deltic Energy Plc ("Deltic" or 'the Company')
Farm out of five Southern North Sea 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 that it has entered into a binding, conditional farm-out
agreement ("the Farm Out Agreement") in relation to five of its gas
licences in the Southern North Sea with Cairn Energy PLC ("Cairn")
through Cairn's wholly owned subsidiary, Nautical Petroleum
Limited.
Summary of Farm Out Agreement
-- Under the terms of the Farm out Agreement, Cairn will acquire
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 will retain a 40% interest in licences P2428 and P2567
and a 30% interest in licences P2560, P2561 and P2562.
-- Cairn will fund 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, which will include the shooting of new
seismic data over Licence P2428.
-- Following the Farm Out Agreement becoming unconditional,
Cairn will pay Deltic an up-front consideration of USD$1 million by
way of contribution towards historic back costs incurred by Deltic
across the licence areas.
-- In the event that a drilling decision is made on either of
P2428 and P2567, which contain the most advanced prospects, Cairn
will fund 70% of the costs of whichever well is drilled first,
subject to a gross well cost cap of USD$25 million.
-- Completion of the farm out is conditional on the entering
into of a Joint Operating Agreement and obtaining standard
regulatory consents from the Oil & Gas Authority, subject to a
three-month backstop.
-- Cairn will become Operator of all five licences following completion.
Graham Swindells, Chief Executive of Deltic Energy,
commented:
" This agreement represents the commencement of a wide-ranging
partnership with Cairn, whose successful history of opening up new
basins is aligned with our exploration-focused strategy. The
partnership will result in a significant investment across multiple
licences within Deltic's strategic Southern North Sea gas
exploration portfolio, as we jointly progress the next high impact
drilling targets. It provides further endorsement of the quality of
the portfolio that our team has developed and also our gas focussed
exploration strategy, as we continue to supply our conveyor belt of
opportunities and attract the best partners to facilitate potential
drilling.
We are particularly excited at the prospect of building our
partnership with Cairn, a well-funded and highly experienced North
Sea operator. Both parties share a commitment to pursuing high
impact exploration opportunities in the Southern North Sea and
successfully developing these gas prospects."
Further information
P2428 (Cupertino Area) and P2567 (Cadence Area)
-- The P2428 licence area was awarded in the 30(th) Offshore
Licensing Round and contains prospects and leads at multiple
geological levels. The key prospect identified by Deltic is the
Plymouth Prospect, a large Zechstein carbonate build-up, which is
analogous to Deltic's Pensacola Prospect and the Crosgan discovery.
Other leads have been identified in the Leman Sandstone and the
Carboniferous sections. The area is currently imaged on legacy 2D
seismic data dating back to the early 1990s and new 3D seismic will
be acquired to support a well investment decision on this
licence.
-- The P2567 licence was awarded in the 32(nd) Offshore
Licensing Round and contains prospects in the Triassic Bunter
Sandstone and the Carboniferous. The Carboniferous is the primary
focus and Deltic has identified the large intra-Carboniferous
Cadence prospect and believes the Base Permian Unconformity (BPU)
subcrop play is also prospective across the licence area.
-- Under the terms of the Farm Out Agreement, Cairn will acquire
a 60% interest in each of Licences P2428 and P2567, and will be
appointed as the licence Operator, in return for paying 100% of the
costs of an agreed forward work programme up to the date on which a
well investment decision is made.
-- It is expected that the work programme over these two licence
areas will involve the acquisition and processing of new 3D seismic
data across P2428 and P2567 and the associated interpretation and
studies required to support a well investment decision.
-- Should a well investment decision be made on either of the
two licences, Cairn will fund 70% of the costs of whichever well is
drilled first, subject to a gross well cost cap of USD$25
million.
-- Deltic will retain a 40% non-operated interest in Licence P2428 and P2567.
P2560, P2561 & P2562 (South Breagh Area)
-- The P2560, P2561 and P2562 licence areas were awarded in the
32(nd) Offshore Licensing Round and are located between two
significant gas fields in Breagh and Tolmount, located to the north
and south respectively. Exploration in the area has been
constrained historically by a lack of high-quality 3D seismic data
and Deltic believes there is significant potential in the
Zechstein, Leman and Carboniferous sections across the acreage.
Having only been recently awarded, these assets are less mature in
terms of geological work undertaken compared to the Cupertino and
Cadence areas.
-- Under the terms of the Farm Out Agreement, Cairn will acquire
a 70% interest in each of Licences P2560, P2561 and P2562, and will
be appointed as the licence Operator, in return for paying 100% of
the costs of an agreed forward work programme on each licence, up
to the date on which a well investment decision is made on each
licence.
-- The work programme over these licences is expected to involve
the purchase and reprocessing of legacy datasets to improve image
quality and/or the acquisition of new 3D seismic data across all or
part of the licenced areas. This will be supported by the various
interpretation workflows and other studies required to make the
various well investment decisions on each licence.
-- All costs incurred following a well investment decision will
be satisfied by each party in proportion to their working
interest.
-- Deltic will retain a 30% non-operated interest in Licences P2560, P2561 and P2562.
-- Following the Farm Out Agreement becoming unconditional,
Cairn will pay Deltic an up-front consideration of USD$1 million by
way of contribution towards historic back costs incurred by Deltic
across the licence areas.
A further announcement will be made in relation to the
fulfilment of the Farm Out Agreement's conditions in due
course.
**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
& Joint Broker) 5656
David Hart / Alex Brearley (Corporate Finance)
Kelly Gardiner (Sales and Corporate Broking)
Stifel Nicolaus Europe Limited (Joint Broker) Tel: +44 (0) 20 7710
7600
Callum Stewart / Simon Mensley / Ashton
Clanfield
Vigo Consulting (IR Adviser) Tel: +44 (0) 20 7390
0230
Patrick d'Ancona / Chris McMahon / Oliver
Clark
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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