Deltic Energy preparing for 2024 drilling programme

The AIM-traded firm said its first drilling target for 2024 would be the Selene gas prospect on licence P2437.

Site survey work was completed, providing crucial data for the upcoming geotechnical survey scheduled to start this month.

The board said the surveys would be vital for ensuring the safe installation of the drilling rig at the selected location.

Selene, a high-impact, low-risk prospect, was estimated to hold gross P50 prospective resources of 318 billion cubic feet of gas, with a geological success probability of 70%.

Critical long lead items, including casing, had been identified, and procurement processes were well advanced, keeping Selene on track for drilling in the third quarter of 2024.

Following the oil and gas discovery in 2023 and a resource upgrade, Pensacola was confirmed as a significant discovery in the Southern North Sea.

Deltic said it was collaborating closely with joint venture partners to formulate an appraisal strategy for Pensacola.

This month, a favourable well investment decision was expected, with appraisal planning well advanced.

Pending regulatory approvals, the Pensacola appraisal well was slated to be drilled after Selene in late 2024.

Site survey work for the Pensacola appraisal well would be carried out in the first half of 2024, while the rig selection process for both Selene and Pensacola was ongoing.

Deltic said it was actively exploring options to realise value and reduce future capital expenditure for the Selene and Pensacola assets, with significant industry interest in the projects.

The company said it was engaged in discussions with potential counterparties regarding various transaction possibilities for the assets.

Regarding licensing, Deltic submitted applications for licences in the UK’s 33rd licensing round, with interviews conducted during the second quarter of 2023.

Delays in the awarding process had led to a continued wait for outcomes.

Additionally, due to Capricorn’s exit from exploration assets outside Egypt, Deltic proposed advancing two licences, P2567 and P2428, subject to North Sea Transition Authority (NSTA) approval for an extension.

However, the NSTA denied an extension for P2567, leading to its relinquishment on 30 November.

The company said it was considering reapplying for the licence in the next UK licensing round.

Deltic added that it was still seeking an alternative partner for P2428, where the current licence phase was due to end on 31 March 2024.

As of 30 November, Deltic’s cash position stood at £6.1m, aligning with management expectations.

“This continues to be a busy year for Deltic, as we lay the foundations for what will be a very exciting and active 2024,” said chief executive officer Graham Swindells.

“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.”

At 1422 GMT, shares in Deltic Energy were down 1.08% at 23p.

Reporting by Josh White for Sharecast.com.