A relatively little-known oil and gas firm has provided further evidence there is still lots to go for on the exploration front in the North Sea although it may face challenges trying to develop finds in the area.

Deltic Energy said a discovery it made with Shell that previously caused a stir looked to be even bigger than expected.

Following detailed analysis of well results, the company said the Pensacola find could contain around 100 million barrels of oil equivalent (mmboe) recoverable reserves compared with original estimates of 50mmboe.

The analysis confirmed that Pensacola contains oil as well as gas.

It suggests the find could be one of the biggest made in the North Sea for years, confounding claims that there after 50 years of drilling there aren’t big discoveries to be made in the North Sea.

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Such a find would provide stunning vindication for the firm’s decision to look again at areas that it believed had potential others had underestimated.

The former Cluff Natural Resources launched its exploration campaign while it was led by Algy Cluff, who played a pioneering role in the early days of North Sea exploration.

Deltic persuaded Shell to buy into the acreage concerned in 2019 amid tough times for the industry.

Shell has a market capitalisation of £160 billion compared with around £30 million for Deltic.

Shell decided to proceed with drilling on Pensacola with Deltic after the Government introduced a windfall tax on North Sea firms last year.

Directors of Shell expect demand for hydrocarbons to remain strong for years.

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While environmental campaigners want a ban on North Sea activity, champions of the industry say such a move would require the UK to increase imports of more emissions-intensive oil and gas. Amid the fallout from the war in Ukraine, the Conservative Government wants to maximise domestic production to boost the UK’s energy security.

But Pensacola would face plenty of competition for investment from other assets in Shell’s global portfolio under current conditions.

Labour has said it will ban exploration for new fields if it wins power after the next General Election. It is unclear if it would consider applications for new developments.

The fact Pensacola contains oil could cause complications.

Claims by the likes of Shell that gas can play a valuable role as a transition fuel while renewables are developed could prompt politicians to drop opposition to such developments. Oil projects would be a harder sell on both environmental and commercial grounds.

Shell’s new boss Wael Sawan said recently that the firm would find it harder to invest in North Sea oil developments following the introduction of the windfall tax.