Deltic Energy announces mobilisation of rig to Selene well

Natural resources investment company Deltic Energy announced on Tuesday that the Valaris 123 drilling unit has been mobilised, and is en route to the Selene well location.

The AIM-traded firm said Shell UK, the operator of licence P2437, informed Deltic that the drilling unit left its current location in the Central North Sea on 21 July and was expected to arrive at the Selene site in the Southern North Sea shortly, depending on weather conditions.

Drilling operations at the Selene site were anticipated to begin soon after the unit's arrival, and were expected to last around 90 days.

Deltic said it would provide further updates once drilling had started.

The well aimed to gather critical information on reservoir quality and gas composition, essential for supporting a field development plan and final investment decision, assuming successful drilling outcomes.

As a result, the joint venture had decided that a full well test was unnecessary, and the well would be plugged and abandoned on completion.

Deltic estimated the Selene structure to contain gross P50 prospective resources of 318 billion cubic feet, with a P90-P10 range of 132 to 581 billion cubic feet and a geological chance of success of 69%, within the Leman Sandstone reservoir.

That reservoir is a key interval in adjacent gas fields such as Barque, Clipper, and West Sole.

Through farm-outs to Shell in 2019 and Dana Petroleum E&P in February this year, Deltic said it was fully carried for its 25% working interest in the Selene well, covering costs up to $49m, which exceeds the operator's success case well authorisation for expenditure of $47m.

“We are excited to be commencing drilling operations on Selene with our partners Shell and Dana, and for which we are fully carried for the estimated success case cost,” said chief executive officer Graham Swindells.

“This will be the first exploration well spudded on the UK Continental Shelf in 2024 and is an equally important milestone for Deltic.

“The Selene prospect is a high impact infrastructure-led exploration opportunity which demonstrates the strength and depth of the portfolio that we have built over the last few years, and which we estimate to be worth multiples of the company's current market value.

“Despite ongoing political uncertainty, we look forward to commencing operations and continue to believe exploration on the UK Continental Shelf has a hugely important role to play in supporting the provision of energy security, vital jobs within the energy sector and offsetting higher carbon intensity imported energy.”

At 1400 BST, shares in Deltic Energy were up 6.98% at 11.5p.

Reporting by Josh White for Sharecast.com.