By Scott Wright
DELTIC Energy and Shell have sanctioned investment to begin drilling on a major prospect in the UK Southern North Sea, sending shares in the minnow up seven per cent.
Drilling is to start on the “high impact” Selene Gas prospect off the North-east coast of England in a move hailed by Deltic boss Graham Swindells as “another highly significant milestone” for the company. It comes after Deltic attracted Shell and Edinburgh-based Capricorn Energy, formerly Cairn Energy, to buy into acreage on licences it holds in the area.
Companies involved in North Sea gas production have seen their fortunes boosted as commodity prices have surged in light of Russia’s assault on Ukraine, with activity in the basin being revived against a backdrop of climate change concern.
READ MORE: North Sea gas giant Serica Energy knocks back latest takeover offer
The Selene prospect, contained within licence P2437, was described by Deltic yesterday as one of the largest un-appraised structures in the Leman Sandstone fairway of the Southern Gas basin. With the technical and commercial evaluation of the prospect now complete, it was announced yesterday that the joint venture partners will now move on to the detailed well design, planning, rig procurement and other key preparations to support drilling operations.
Under the terms of the original farm-out with Shell, Deltic holds a 50% working interest in the licence but will carry 75% of the costs of the drilling and testing of the well on the Selene prospect, up to $25 million. Shell will be appointed operator of the licence following the decision to start drilling on the prospect.
Mr Swindells said: “This is a very exciting time for Deltic as we move into the next phase of our strategy, building on the strong platform created by farm outs to both Shell and Capricorn. The commitment to drill this material, high impact, low-risk gas prospect is another highly significant milestone for Deltic and our team.
“Adding another committed well to our programme, following recent confirmation that Pensacola will be drilled in September, represents further endorsement of the quality of Deltic’s assets as well as demonstrating the success of our strategy to create a conveyor belt of exploration opportunities moving from licensing to drilling with world-class partners in place.”
Shares in Deltic closed up 0.21p at 3.01p.
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