REG - Deltic Energy PLC - Operational and Strategic Update

Deltic EnergyAnnouncement

21/10/2024 07:00

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RNS Number : 8570I  Deltic Energy PLC  21 October 2024

Prior to publication, the information contained within this announcement was
deemed by the Company to constitute inside information as stipulated under the
UK Market Abuse Regulation. With the publication of this announcement, this
information is now considered to be in the public domain.

 

Deltic Energy Plc / Index: AIM / Epic: DELT / Sector: Natural Resources

 

21 October 2024

 

 

Deltic Energy Plc ("Deltic" or "the Company")

Operational and Strategic Update

Non-Executive Board Change

Change of Broker

 

Deltic Energy Plc (https://delticenergy.com/) , the AIM quoted natural
resources investing company, provides the following strategic, operational and
organisational update:

 

Strategic Evolution

 

For the last decade, Deltic has invested in its UK portfolio and achieved
material exploration success despite the well-publicised political and fiscal
headwinds that have hampered the UK's oil and gas industry in recent years. It
is clear that, while this situation persists, the UK is not the ideal place in
which to invest in new oil and gas exploration or appraisal opportunities.
Therefore, the Board has carefully considered the best way to leverage the
Company's international experience and expertise to create value for
shareholders going forward.

 

Over the next 12 months, Deltic's strategic focus will be on:

 

·    Extraction of value from its existing core UK assets, principally the
Selene prospect, while eliminating or deferring expenditure on non-core UK
assets

 

·    Leveraging the Company's core subsurface skill sets, which have been
deployed successfully across a range of international territories
historically, to identify and access opportunities in overseas arenas with an
initial focus on projects with early cash flows and faster cycle times from
entry to value crystallisation

 

·    High-impact exploration will always be an integral part of Deltic's
DNA, and the Company will continue to selectively pursue these types of
opportunities which could provide significant upside for shareholders in the
medium to longer term

 

Non-Executive Board Change

 

Peter Cowley has agreed to step down from the Board of Deltic with immediate
effect and leaves with the Board's best wishes. There are no plans to recruit
a replacement for Peter in the shorter term and the Company will continue with
Mark Lappin and Peter Nicol as its independent non-executive directors while
it works through this strategic transition.

 

Drilling Operations - Selene Exploration Well

 

Well operations continue on the high-impact Selene exploration well. The Shell
operated well reached its total target depth of 3540 metres on 17 October 2024
and encountered a 160 metre thick section of Leman Sandstone with gas present
throughout.

 

While initial observations are clearly encouraging, Deltic will need to wait
on further results from the logging and fluid sampling operations before
providing a comprehensive update in due course.

 

Deltic has a 25% working interest in the Selene licence which is located in
the heart of the long-established Leman Sandstone gas play in the Southern
North Sea. In a success case, the intention would be to proceed directly to
field development planning as further appraisal drilling is not considered to
be necessary to support a future development investment decision.

 

Blackadder Licence P2672 - Farm-out Interest

 

Given the positive read across from Selene to the Blackadder prospect, Deltic
has been in receipt of farm-in interest in the licence from a number of
companies. The Company will look to capitalise on this third-party interest to
materially reduce or eliminate its cost exposure to the forward work programme
on this licence. To allow time for these discussions to mature, Deltic intends
to defer the commencement of planned work programmes until at least mid-2025,
minimising any near-term expenditure.

 

Syros Licence P2542 - Central North Sea

 

Despite the excellent technical work completed by the Deltic team, which
significantly de-risked the Syros prospect, the ongoing political and fiscal
uncertainty has prevented a number of parties that participated in the
farm-out process from moving forward with a transaction. Deltic has requested
a 12-month extension from the NSTA to Phase A to allow a period of stability
post the October budget in which Deltic could re-engage with those interested
parties. However, the NSTA has indicated it is not minded to support the
request and therefore it is likely this licence will now expire on 30 November
2024.

 

Dewar Licence P2646 - Central North Sea

 

Given the continuing deterioration of the fiscal and operating environment in
the UK since this licence was awarded in February 2024, Deltic has entered
into negotiations with the NSTA in relation to the Phase A work programme
requirements on Licence P2646. Deltic does not intend to incur any of the
planned costs associated with the Phase A work programme in 2025.

 

Change of Broker Arrangements

 

In recognition of the situation in which the Company currently finds itself,
Deltic has reviewed the full range of advisory services it utilises, including
its broker arrangements. Going forwards, Canaccord will assume the role of
sole broker for the company. Allenby Capital will continue in its role of
Nominated Advisor.

 

Andrew Nunn, CEO, commented:

 

"First of all, I would like to thank Peter Cowley for his Board contributions
and support over the years. We wish him all the best in his future endeavours.

 

Our immediate focus is the ongoing Selene exploration well, where initial
drilling indications are encouraging. I look forward to updating the market on
the progress of this highly material well.

 

The Board has considered the best way to deploy the Company's experience and
expertise to create value for its shareholders. As always, the balance of
geological, operational and political risk must be considered and we are
actively assessing a number of attractive opportunities in geographies where
more supportive policies towards oil and gas development exist.

 

The key changes we have announced today, in addition to a raft of other less
significant changes, will have an immediate and material impact on the
Company's operational expenditure and are expected to result in savings of 40%
compared to costs previously budgeted by management for 2025. These savings
are key to extending the time period in which to identify and incubate those
new opportunities that we believe will help towards stabilising the business
and providing a platform for future growth supporting our objective of
creating positive returns for shareholders."

 

**ENDS**

 

For further information please contact the following:

 

 Deltic Energy Plc                                                                    Tel: +44 (0) 20 7887 2630

 Andrew Nunn / Sarah McLeod

 Allenby Capital Limited (Nominated Adviser)                                          Tel: +44 (0) 20 3328 5656
 David Hart / Alex Brearley (Corporate Finance)

 Canaccord Genuity Limited (Broker)                                                   Tel: +44 (0) 20 7523 8000
 Adam James / Charlie Hammond

 Vigo Consulting (IR                                                                  Tel: +44 (0) 20 7390 0230
 Adviser)

 Patrick d'Ancona / Finlay Thomson / Kendall Hill

 

Qualified Person Review

Andrew Nunn, a Chartered Geologist and Chief Executive Officer of Deltic, is a
"Qualified Person" in accordance with the Guidance Note for Mining, Oil and
Gas Companies, June 2009 as updated 21 July 2019, of the London Stock
Exchange. Andrew has reviewed and approved the information contained within
this announcement.

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