REG - Deltic Energy PLC - Pensacola Gas Discovery

Deltic EnergyAnnouncement

08/02/2023 07:00

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RNS Number : 2296P  Deltic Energy PLC  08 February 2023

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 which forms part of domestic UK law pursuant to the European
Union (Withdrawal) Act 2018 ("UK MAR"). With the publication of this
announcement via a Regulatory Information Service, this inside information is
now considered to be in the public domain.

 

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

 

8 February 2023

 

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

 

Pensacola Gas Discovery

 

Deltic Energy Plc, the AIM-quoted natural resources investing company with a
high impact exploration and appraisal portfolio focused on the Southern and
Central North Sea, is pleased to announce a significant gas and oil discovery
at Pensacola on Licence P2252 in the Southern North Sea.

 

Highlights

 

·    Pensacola could represent one of the largest natural gas discoveries
in the Southern North Sea in over a decade.

·    Deltic pre-drill volumetrics for Pensacola confirmed by well - P50
Estimated Ultimate Recovery ('EUR') of 302 BCF.

·    Well opens a new Zechstein play in this mature basin.

·    Flow test results inline with Deltic's pre-test expectations based on
the reservoir parameters derived from the well.

 

Graham Swindells, Chief Executive of Deltic Energy, commented:-

 

"Deltic's first exploration well at Pensacola has resulted in a highly
positive outcome and, at approximately 300 BCF, would represent one of the
largest natural gas discoveries in the Southern North Sea in over a decade.
This discovery is a major milestone in the development of our Company as we
continue to execute our exploration led strategy and progress our portfolio of
high-quality drilling opportunities as we seek to create value for our
shareholders.

 

We believe that the Pensacola discovery will open a new Zechstein play in this
mature basin and highlights the remaining potential of the North Sea as a
source of further discoveries which can provide domestically produced natural
gas, supporting UK energy security while we transition toward a Net Zero
economy.

 

As we continue our preparations for drilling the Selene well, we are now
looking forward to working with our partners as we continue to progress this
exciting and significant gas discovery at Pensacola, and look forward to
updating the market on our future plans."

 

Well 41/05a-2, operated by Shell UK Ltd ("Shell"), reached a total depth of
1,965 metres true vertical depth subsea ("TVDSS") and the presence of mobile
gas and oil in the primary Zechstein Hauptdolomite carbonate target interval
was confirmed via wireline logs.  The well encountered the top Hauptdolomite
reservoir at 1,745 metres TVDSS and confirmed a reservoir thickness of 18.8
metres with better than expected porosity averaging 16%.  As planned, the
well penetrated the edge of the Pensacola structure in a down dip location and
has proven a substantial hydrocarbon column.

 

Post acidization, the well flowed gas at peak rates of c. 4.75 mmscf/day
declining to 1.75mmscf/day after the 12 hours of the test.  These results are
in-line with Deltic's pre-test expectations based on the reservoir parameters
derived from the well. Being located down dip, the flow rates observed during
the well test are not expected to be representative of flow rates of potential
future production wells which would likely target the central part of the
Pensacola structure and are expected to generate higher rates.

 

Light oil with a preliminary gravity of 34-36° API was also produced at a
rate of approximately 18 bbls/day during the well test. The potential of this
oil with respect to the Pensacola opportunity is yet to be determined.

 

Based on the data collected during drilling and testing, Deltic has updated
its volumetric models and now estimates the Pensacola discovery to contain P50
EUR of 302 BCF (P90 to P10 Range = 164 to 519 BCF) which are fully aligned
with Deltic's pre-drill guidance.

 

Following completion of the well test programme, as planned and previously
stated, the well will now be plugged and abandoned in line with the usual
procedure for a well of this nature, and the Noble Resilient will be
de-mobilised from site.  The net cost to Deltic of drilling the Pensacola
well is expected to be £11.1m reflecting certain additional operational
requirements during drilling, weather conditions, additional testing costs, as
well as market influences, including inflation and exchange rate movements.

 

Deltic will now incorporate the findings from the well into its geological and
commercial models and work with the Joint Venture on the forward appraisal and
development plan.

 

Following this discovery, in line with the Company's strategy, Deltic will
consider all options in relation to its interest in Pensacola including
appraisal and development as well as potential full or partial monetisation of
value.  Deltic remains committed to maximising shareholder value from the
discovery and across its asset base.

 

Deltic retains a 30% working interest in Licence P2252 alongside Shell (65%)
and ONE-Dyas (5%).

 

 

**ENDS**

 

For further information please contact the following:

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

 Graham Swindells / Andrew Nunn / Sarah McLeod

 Allenby Capital Limited (Nominated                                             Tel: +44 (0) 20 3328 5656
 Adviser)

 David Hart / Alex Brearley (Corporate Finance)

 Stifel Nicolaus Europe Limited (Joint                                          Tel: +44 (0) 20 7710 7600
 Broker)

 Callum Stewart / Simon Mensley / Ashton Clanfield

 Canaccord Genuity Limited (Joint Broker)                                       Tel: +44 (0) 20 7523 8000

 Adam James / Gordon Hamilton

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

 Patrick d'Ancona / Finlay Thomson / Kendall Hill

 

About Deltic Energy Plc

Deltic has created a strategically located portfolio of high-quality gas
exploration licences in the Southern North Sea over a number of licensing
rounds.  These licences are located in areas that have been underexplored
despite significant discoveries such as Tolmount, Breagh, Pegasus and Cygnus,
most of which have gone on to be developed and could provide ready access to
export infrastructure for any future developments on Deltic's licence acreage.

 

Qualified Person

Andrew Nunn, a Chartered Geologist and Chief Operating 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.

Standard

Estimates of resources have been prepared in accordance with the PRMS as the
standard for classification and reporting.

 

 

Glossary of Technical Terms

 °API:                                 a measure of the density of crude oil, as defined by the American Petroleum
                                       Institute

 bbls/day                              Barrels per day

 PRMS:                                 the June 2018 Society of Petroleum Engineers ("SPE") Petroleum Resources
                                       Management System

 BCF:                                  Billion Cubic Feet

 mmscf/day:                            Million standard cubic feet per day

 P90 resource:                         reflects a volume estimate that, assuming the accumulation is developed, there
                                       is a 90% probability that the quantities actually recovered will equal or
                                       exceed the estimate.  This is therefore a low estimate of resource.

 P50 resource:                         reflects a volume estimate that, assuming the accumulation is developed, there
                                       is a 50% probability that the quantities actually recovered will equal or
                                       exceed the estimate.  This is therefore a median or best case estimate of
                                       resource.

 P10 resource:                         Reflects a volume estimate that, assuming the accumulation is developed, there
                                       is a 10% probability that the quantities actually recovered will equal or
                                       exceed the estimate.  This is therefore a high estimate of resource.

 Estimated Ultimate Recovery ('EUR'):  Estimated Ultimate Recovery is defined as those quantities of petroleum which
                                       are estimated, on a given date, to be potentially recoverable from an
                                       accumulation, plus those quantities already produced therefrom.
 TVDSS:                                True Vertical Depth Sub-Sea

 

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