SHARES in Deltic Energy surged as it raised the prospect of monetising its stake in the prized Pensacola discovery in the North Sea.
Pensacola was “one of the largest natural gas discoveries in the Southern North Sea” after a successfully drilling campaign with farm-in partner Shell.
The oil and gas giant bought into the licence in 2019 and has since seen the decision to acquire a 70% stake as operator in the prospect identified by Deltic vindicated, with drilling between November and February revealing Pensacola to be a “very significant discovery of gas”.
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Deltic said it is now considering its options for its 30% interest in Pensacola.
Shares rose more than eight per cent in early trading before paring back, closing up nearly 3% at 1.85p.
The company noted yesterday that it is continuing to work on its “second potentially high-value asset, the Selene gas prospect”, also in the southern North Sea. And it said it had submitted multiple applications for blocks and part blocks in the UK’s 33rd Offshore Licensing Round as it looks to diversify and strengthen its portfolio in the area.
Chief executive Graham Swindells said: “2022 saw a fundamental shift in the delivery of Deltic's business model as the Pensacola well started drilling in November, subsequently being announced as a highly material gas discovery in February this year.
"Pensacola entirely vindicates our long-term business strategy of identifying high-value exploration assets at a very early stage and bringing them to fruition.
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"We are now in the enviable position of deciding how best to appraise and develop this 300 BCF (billion cubic feet) discovery alongside our partners and delivering value for shareholders.
“Moreover, we continue to advance our second potentially high-value asset, the Selene gas prospect, also located in the Southern North Sea. Together with our partner Shell, we expect to drill this similar sized prospect to Pensacola in the summer of 2024.
"With this drilling activity coupled with additional prospectivity from the rest of our portfolio and potential new licence awards, I believe the future looks extremely positive for Deltic, especially at a time when the UK should rightly be focused on its longer-term energy security."
Deltic reported that it ended 2022 with a cash position of £20.4 million, up from £10.1m the year before, with no debt. Its cash position was £15.1m on March 31, unaudited.
The Pensacola well cost was £12.8m, of which £5.6m will be billed to Deltic’s joint venture partner from March 31.
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