SHARES in Deltic Energy closed up nearly 9% last night after it was granted more time to come up with its share of development costs for a promising North Sea field.
The oil and gas minnow announced it has been given a short deadline extension until June 12 from partner Shell as it talks progress over a deal to fund appraisal costs for the Pensacola prospect in the southern North Sea.
However, it reiterated that there is no guarantee it will strike a deal in that timeframe and may have to withdraw its interest in the licence.
Deltic said in a statement to the stock market: “Deltic has been granted a short period of additional time from Shell UK Ltd, in its capacity as licence operator of P2252, which will allow Deltic until 12 June to progress discussions with potential counterparties in relation to a possible transaction.
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“There is however no guarantee that discussions will be concluded successfully within that timeframe, and, in such circumstances, Deltic will be required to withdraw from the Pensacola licence and transfer its interest in Pensacola to its joint venture partners.
“The company will make further announcements in due course.”
Deltic highlighted the development potential of the field in the southern North Sea when it made the Pensacola find that the company described as a potential “game changer” and persuaded Shell to buy into it. The company now holds a 30% stake in the licence. Its partners in the joint venture are Shell and One-Dyas of the Netherlands.
Deltic first cast doubt on its ability to fund its share of appraisal costs for the Pensacola find at the end of April. It said then that the windfall tax was deterring firms form investing in the North Sea.
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Deltic said at the time: “The feedback from Deltic's Pensacola farm-out process has indicated that the continual tinkering with the energy profits levy and resultant fiscal uncertainty created by the current government, along with recent rhetoric emanating from the Labour Party, have had a severely negative effect on the ability of UK exploration and production (E&P) companies to commit to long term investments in the North Sea.
“This has resulted in many operators diverting capital away from the UKCS or delaying investment decisions, especially with respect to new largescale opportunities like Pensacola.”
Shares in Deltic closed up 8.51%, or 1p, at 12.75p.
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