Deltic Energy has entered into an agreement in respect of the farm-out of a 25% interest in Licence P2437, containing the Selene Prospect, to Dana Petroleum. This transaction, in combination with the existing Shell UK carry, results in Deltic retaining a 25% non-operated interest in Licence P2437 and having no exposure to 2024 drilling and testing costs up to a cap in excess of current success case well cost estimates provided by the Operator.

Highlights

• Deltic retains a 25% non-operated equity interest in P2437
• Deltic to transfer 25% equity in P2437 to Dana in return for:
  • $500K in cash on completion in relation to back costs incurred by Deltic
  • Dana to carry Deltic for its residual cost exposure to the Selene well (after utilisation of the existing carry from the Shell farm-out) to a value of $5M, and $6M in a success case
  • Dana to pay its 25% share of costs from 1 January 2024
• Any gross well costs incurred in excess of $40M (dryhole) or $49M (success case) and any non-well related costs incurred after the effective date of 1 January 2024 will be split along equity lines
• As a result of the Dana carry and the Shell carry referenced above, Deltic will have no cost exposure to the Selene exploration well up to $40M (in the case of a dry hole) or $49M (in a success case) in aggregate
• The recent estimate of well costs from the Licence Operator, Shell, indicate a total success case cost of the Selene well at $47M
• Completion of the farm-out is conditional on obtaining consent from Shell and standard regulatory consents from the North Sea Transition Authority

Well Planning Update

Preparatory works for the Selene well continue to progress on time and according to plan. Geophysical and geotechnical site surveys have been completed and critical long lead items including casing have been ordered. Procurement processes are also well advanced with the rig contract for the Valaris 123 having been announced on 5 February meaning that the Selene well remains on track to be drilled in Q3 2024.

Graham Swindells, Chief Executive of Deltic Energy, commented:    
"We are delighted to have strengthened the P2437 JV with the addition of an established operator like Dana who have a long history of successful exploration and development in the Southern North Sea. As a result of the transaction Deltic retains a material stake in one of the highest impact UK exploration wells planned in 2024 while effectively eliminating our estimated cost exposure to the exploration well, which remains scheduled to commence in Q3 2024. I look forward to updating the market as we progress through a very exciting year for Deltic, including our active and ongoing process to realise value and farm down our Pensacola discovery."

KeyFacts Energy: Deltic Energy UK country profile   l   Dana Petroleum UK country profile 
KeyFacts Energy: Farm-in opportunities