Deltic Energy announces farm-out deal with Dana Petroleum for Selene prospect

Deltic Energy Plc, an AIM-quoted investing company with a focus on high-impact exploration and appraisal in the Southern North Sea, is pleased to announce a farm-out agreement of a 25% interest in Licence P2437, which contains the Selene Prospect, to Dana Petroleum (E&P) Limited (“Dana”). This strategic move, coupled with the existing carry agreement with Shell UK Ltd (“Shell”), positions Deltic to retain a 25% non-operated interest in the licence while being fully covered for the 2024 drilling and testing costs up to a cap exceeding current success case estimates provided by Shell, the Licence Operator.

Highlights of the Agreement:

– Deltic transfers 25% equity in P2437 to Dana, receiving $500K in cash for back costs and a carry for its residual cost exposure to the Selene well, amounting to $5M, and $6M in a success case scenario.

– Dana will also cover its 25% share of costs from 1 January 2024, ensuring Deltic has no cost exposure to the Selene exploration well up to $40M in a dry hole scenario or $49M in a success case, in aggregate.

The transaction, subject to consent from Shell and standard regulatory approvals from the North Sea Transition Authority, fortifies the P2437 joint venture with Dana’s proven exploration and development expertise in the Southern North Sea. Deltic’s CEO, Graham Swindells, expressed enthusiasm about adding Dana to the JV, emphasizing the strategic retention of a material stake in one of 2024’s most anticipated UK exploration wells, while mitigating cost exposure.

Dana Petroleum, a wholly-owned subsidiary of the Korea National Oil Corporation, boasts a robust production profile across the UK, Netherlands, and Egypt, with a particular strength in the Southern North Sea, evidenced by its involvement in the Tolmount field and the successful Earn exploration well.

Selene, estimated to contain gross P50 Prospective Resources of 318 BCF of gas, is one of the Southern Gas Basin’s largest unappraised structures within the Leman Sandstone fairway. With a high geological chance of success at 70%, the prospect’s drilling is eagerly anticipated in Q3 2024, following a comprehensive preparatory phase including geophysical and geotechnical site surveys and the procurement of critical long-lead items.

This agreement not only underscores the collaborative spirit within the energy sector but also highlights the strategic efforts to realize the significant potential of natural gas resources in the North Sea. As Deltic Energy, Dana Petroleum, and Shell UK Ltd move forward with the Selene well, the industry watches closely, recognizing the impact such explorations have on understanding and harnessing the UK’s energy resources.