TIDMDELT

RNS Number : 0710G

Deltic Energy PLC

23 November 2020

23 November 2020

Deltic Energy Plc / Index: AIM / Epic: DELT / Sector: Natural Resources

Deltic Energy Plc

("Deltic" or "the Company")

Licence P2428 - Prospectivity Update

Deltic Energy Plc, the AIM-quoted natural resources investing company progressing its high impact exploration and appraisal portfolio focused on the Southern and Central North Sea , is pleased to provide further information in relation to its Licence P2428, which contains the Cupertino Prospect (the "Cupertino Area") following completion of detailed technical evaluation of this key Southern North Sea licence.

Licence Background

Licence P2428 was awarded to the Company in the UK's 30(th) Offshore Licensing Round with an effective date of 1 October 2018. Preliminary work completed by Deltic to support the application process identified the potential for significant prospectivity in the deeper Carboniferous section. Deltic also recognised the limitations of the pre-existing legacy 2D seismic datasets and the potential uplift in data quality which could be achieved through modern reprocessing workflows.

Throughout 2019, the Deltic technical team worked closely with its selected contractors to reprocess 852 line kilometres of vintage 2D data using a modern Pre-stack Depth Migration ("PSDM") workflow which resulted in a significant uplift in data quality. The technical work completed since the reprocessed seismic data was delivered has not only matured the Cupertino Prospect but has also identified significant previously unrecognised prospectivity in the Rotliegend northern feather edge play as well as the emerging Zechstein Reef play.

The licenced area also contains the depleted and decommissioned Forbes Gas field which produced gas from the Triassic Bunter Sandstone between 1985 and 1995, and which has been previously evaluated for its gas storage potential and its possible suitability for CO(2) storage in the future.

Prospectivity Summary

Three geographical prospects have been identified on the licence, which the Company believes are of suitable scale for future commercialisation. The Prospective Resources associated with each of these prospects is summarised in the table below.

 
  Prospect     Status      Reservoir Formation        Prospective Resources       GCoS 
    Name                                              (100% Working Interest) 
                                                               BCF                 % 
                                                  -----------------------------  ----- 
                                                     P90      P50        P10 
                                                  --------  -------  ----------  ----- 
 Cupertino    Prospect    Scremerston Formation      103      379       1,060      26 
             ----------  -----------------------  --------  -------  ----------  ----- 
  Richmond    Prospect    Rotliegend Leman           62       211        547       20 
             ----------  -----------------------  --------  -------  ----------  ----- 
   Carboniferous BPU                                  9        32        97        30 
  ----------------------------------------------  --------  -------  ----------  ----- 
 Plymouth*    Prospect    Z2 Zechstein Reef          32       282       1,267      19 
             ----------  -----------------------  --------  -------  ----------  ----- 
                                           Total     205      904       2,971 
  ----------------------------------------------  --------  -------  ----------  ----- 
 

*NB: this is a 'whole trap' volume but the structure does extend into unlicensed acreage to the east

Graham Swindells, CEO of Deltic, commented:

"The strength and progression of Deltic's growing asset base and its pipeline of drilling prospects continue to be enhanced as we further refine the multiple opportunities it holds. Our technical team continues to produce exceptional work, uncovering more previously unrecognised prospectivity in this underexplored part of the basin.

With combined P50 recoverable gas resources in excess of 900 BCF or the equivalent to in excess of 150 million barrels of oil, these prospects are clearly material in terms of their overall scale both individually and collectively. In addition to our Selene and Pensacola prospects with Shell, these Cupertino stacked prospects, coupled with our recently re-acquired Cadence prospect, followed by our other recent licence awards, continue to deliver our stated strategy of developing a conveyor belt of exploration drilling opportunities of material scale. Our attention will now turn to attracting the best possible partner to help us take these opportunities forward towards drilling."

Cupertino Prospect

The Cupertino Prospect is a 4-way dip closed intra-Carboniferous prospect in the Scremerston Formation which is a proven producing reservoir at the Breagh Gas Field and at the Crosgan Discovery located 40 kilometres to the West.

The prospect is mapped on various vintages of legacy 2D data and covers an area of approximately 68 km(2) with the structural crest at approximately 3,500m TVDSS and a potential hydrocarbon column height of 220 metres. Based on the work completed to date, Deltic has estimated P50 GIIP for the Cupertino prospect at 705 BCF with a P90 to P10 range of 258 BCF to 1,615 BCF. The company has based its recovery factors on the limited data available from analogous fields and would expect these recoverable resource numbers to be further refined as more drilling data becomes available.

The larger prospect area is divided into a number of fault blocks and would be much better resolved with the benefit of new 3D seismic which the Company believes would be required to support a well investment decision in the future.

Further intra-Carboniferous prospectivity in the deeper Fell Sandstone Formation, which was recognised at the time of application, remains intact. However, the 2D seismic data quality at this level is not sufficient to fully define a prospect and this target will be revisited once new 3D seismic data becomes available across this area.

Richmond Prospect

The Richmond Prospect is primarily a Rotliegend Leman Sandstone opportunity with upside in the underlying Carboniferous within the associated BPU closure. The Richmond prospect is a 3-way dip and fault sealed structure with many genetic similarities, including a northern sediment source, to the giant Cygnus field located 50 km to the East, and currently the largest producing gas field in the UK.

The Richmond Prospect overlies the deeper Cupertino Prospect and covers an area of approximately 70 km(2) with the structural crest at approximately 3,040m TVDSS and a potential hydrocarbon column height in excess of 150 metres. Based on the work completed to date, Deltic has estimated P50 GIIP for the Richmond prospect at 494 BCF with a P90 to P10 range of 161 BCF to 1,152 BCF. Recovery factors are based on analogous fields that produce from similar sands in the more mature parts of the basin to the south.

Plymouth Prospect

The Plymouth Prospect is a previously unrecognised Zechstein Reef which is located in a similar paleogeographic setting to the Pensacola prospect on Licence P2252 which Shell farmed into in 2019.

The reef structure covers an area of approximately 161 km(2) and builds up to approximately 250 metres above the regional basinal carbonate platform. The structure is mapped based on a number of different 2D seismic surveys of varying vintage and quality and the Deltic team expects the acquisition of new 3D over this area would significantly de-risk this opportunity.

Hydrocarbons are likely to be sourced from the early Carboniferous basin to the south and are expected to be primarily gas, similar to that produced from Cygnus. Deltic currently estimates a P50 GIIP for the Plymouth Lead of 481 BCF with a P90 to P10 range of 56 BCF to 1,990 BCF with recovery factors used previously at Pensacola to determine prospective resources.

The Plymouth structure does extend into the unlicensed area to the east of the P2428 boundary which is subject to development planning for windfarms which may open up opportunities for electrification of offshore facilities, gas to wire based developments or offshore hydrogen production.

A second potential reef structure is noted immediately to the west of Plymouth, although the quality of the legacy seismic data in that area is currently insufficient to define a closing structure or estimate potential volumes associated with this feature.

Next Steps

Given the lack of 3D seismic data in what is a relatively geologically complex area, Deltic anticipates that the acquisition of modern 3D seismic data across the area will be required to further de-risk these prospects and leads prior to drilling.

Following the conclusions of the work carried out to date, Deltic is now starting to engage with a number of its peers and operators with interests in the region with the aim of attracting partners best placed to assist in the maturation of these highly prospective opportunities towards drilling .

Qualified Person

Andrew Nunn, a Chartered Geologist and Chief Operating Officer of DELT, is a "Qualified Person" in accordance with the Guidance Note for Mining, Oil and Gas Companies, June 2009, of the London Stock Exchange. Andrew has reviewed and approved the information contained within this announcement.

**S**

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 / Asha Chotai 
  (Corporate Finance) 
 
   Stifel Nicolaus Europe Limited (Joint Broker)      Tel: +44 (0) 20 7710 
                                                      7600 
 Callum Stewart / Simon Mensley / Ashton 
  Clanfield 
 
   Vigo Communications (PR & IR Adviser)             Tel: +44 (0) 20 73900230 
 Patrick d'Ancona / Chris McMahon / Simon 
  Woods 
 

Notes to Editors

Deltic Energy Plc (AIM: DELT) is a natural resource investing company with multiple high impact exploration and appraisal assets focused on the UK North Sea.

The Company's diversified asset base contain near term, infrastructure focused oil and gas exploration drilling opportunities in both the Central and Southern North Sea together with larger, high impact opportunities in new play types along the northern margin of the Southern North Sea Gas Basin. It also offers a unique combination of high quality, low risk, low cost drilling prospects at various stages of maturity in an area where recent exploration has targeted both mature and new plays, resulting in large discoveries.

Following successful farm-outs of Licences P2252 and P2437 to Shell U.K. Limited, Deltic's Pensacola and Selene prospects are scheduled to be drilled in 2021 and 2022. The Company is seeking to repeat this success as it progresses its other licences awarded in the 30th and 32nd Offshore Licensing Rounds including licence P2352 which contains the Dewar oil prospect, P2428 containing Cupertino, P2424 containing Cortez and the recently awarded block 43/11 containing Cadence.

The Company achieved success in the UK Oil and Gas Authority's recent 32nd Licensing Round, in which it was provisionally awarded six new licences covering approximately 2,155.5 km(2) . All of the new licences are being awarded to Deltic on a 100% equity basis with the exception of one which has been jointly awarded with Shell holding a 70% working interest, strengthening the two companies' partnership further.

Deltic has built a strong strategic licence position in the Southern North Sea Gas Basin and is focused on extracting much needed gas to supply the UK's energy mix which is currently heavily reliant on imports. Following the award of the new licences, Deltic will have P50 prospective resources totalling 3.5 TCF (gross), equivalent to c. 600 million barrels of oil, spread across multiple prospects.

Glossary of Technical Terms

   BCF:                       Billion Cubic Feet 
   GIIP:                      Gas Initially In Place 
   GCoS:                    Geological Chance of Success 
   PSDM:                  Pre-stack Depth Migration (seismic processing output) 
   P90:                       a 90% probability that a stated volume will be equalled or exceeded 
   P50:                       a 50% probability that a stated volume will be equalled or exceeded 
   P10:                       a 10% probability that a stated volume will be equalled or exceeded 
   TVDSS:                  Total Vertical Depth Subsea 

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