REG - Deltic Energy PLC - Pensacola Resource Estimate Significant Increase

Deltic EnergyAnnouncement

12/07/2023 07:00

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RNS Number : 6981F  Deltic Energy PLC  12 July 2023

12 July 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 ("Deltic" or "the Company")

Significant increase in Pensacola Resource Estimate

 

Deltic Energy Plc today announces a significant increase in its estimate of
oil and gas resources for the Pensacola discovery on Licence P2252 (Deltic WI:
30%). This increase, based on Deltic's post well analysis, is nearly double
initial expectations.

 

Highlights

 

·    Following post well analysis, Deltic now estimates the Pensacola
structure to contain gross P50 initially in place volumes of gas and oil of
342 million barrels of oil equivalent.

 

·    This analysis indicates Pensacola may contain almost double the
volume of recoverable gas and oil than originally thought, with Deltic now
estimating total gross P50 Estimated Ultimate Recovery ('EUR') of c.99mmboe,
up from 50mmboe immediately after well completion.

 

·    Significantly, Deltic now estimates Pensacola contains material
volumes of oil, representing c. 30% of the combined recoverable hydrocarbons.

 

·    Work is progressing with partners to develop the appraisal and
development programme for Pensacola with an appraisal well continued to be
targeted for late 2024.

 

·    Deltic is pursuing monetisation options for the discovery in line
with its strategy.

 

 

Graham Swindells, Chief Executive of Deltic Energy, commented:

 

"The Pensacola oil and gas discovery is transformational for Deltic. Well data
indicates that Pensacola contains close to double our original estimate,
representing one of the most significant discoveries in the North Sea in many
years."

 

"This is an outstanding result for Deltic. Our success to date reinforces the
quality of our technical team and the Deltic model of taking licences from
award through to successful drilling."

 

"We look forward to working with our JV partners to continue moving this
exciting asset through the appraisal phase and onward towards development.
With the significant additions to our resource base, we will also continue to
pursue monetisation options in line with our stated strategy."

 

 

Volumetric Update - Oil and Gas Initially in Place

 

Deltic has updated its volumetric assessment of the Pensacola discovery based
on data collected from the 41/05a-2 well and the results of lab testing.
This represents a significant increase in estimated initially in-place gas and
oil volumes, as set out below:

 

 PENSACOLA DISCOVERY - Oil and Gas Initially in Place (gross, Deltic WI: 30%)
 Hydrocarbon Type  Units    P90  P50  P10
 Gas               BCF      312  459  652
 Oil               MMBO     87   243  485
 Associated Gas*   BCF      40   136  340
 COMBINED          MMBOE**  148  342  650

 TOTAL

*Associated gas is gas dissolved within the oil deposit

** Gas is converted at 5.98 BCF to 1 MMBOE

Licence P2252 which contains the Pensacola discovery is operated by Shell

 

While the expected presence of oil in the south of the prospect represents
highly material upside, the discovered gas volumes in the northern part of the
Pensacola prospect are better constrained and therefore the gas is still
likely to be the initial focus of near-term appraisal and development
activity.

 

 

Preliminary Development Plan and Recoverable Oil and Gas Volumes

 

Based on preliminary reservoir engineering work completed by Deltic, a range
of potential development scenarios have been assessed to allow an estimation
of recoverable volumes which could be produced from the Pensacola discovery.
In all of these scenarios it has been assumed that hydrocarbons will be
exported via a new offshore installation and pipeline to Teesside.  Based on
these scenarios Deltic estimates the range of potentially recoverable oil and
gas associated with the Pensacola discovery as follows:

 

 PENSACOLA DISCOVERY - EUR (gross, Deltic WI:  30%)
 Hydrocarbon Type  Units   P90  P50  P10
 Gas               BCF     198  320  499
 Oil               MMBO    11   30   67
 Associated gas    BCF     24   95   272
 COMBINED TOTAL    MMBOE*  48   99   196

* Gas is converted at 5.98 BCF to 1 MMBOE

Licence P2252 which contains the Pensacola discovery is operated by Shell

 

Post Well Analysis

 

Interpretation work by the JV team following the post-well analytical
programme has reinforced the conclusion that thicker and better quality
Hauptdolomite reservoir is present across the crest of the Pensacola Reef,
which will be targeted in future appraisal and development drilling.

 

The Hauptdolomite cores collected at the well location have an average
porosity of 18.8% with a maximum permeability of 40mD (average of 6mD), better
than the reservoir quality initially estimated from wireline logs.  Dynamic
reservoir modelling by Deltic indicates that the reservoir quality encountered
at the well location would support commercial flow rates from horizontal
wells, without requiring any improvement in reservoir quality up-dip.

 

Next Steps

 

Deltic continues to work closely with the Licence Operator and our JV partners
to develop the appraisal programme for the Pensacola discovery.  Subject to
JV and other regulatory approvals, the drilling of an appraisal well on
Pensacola is continued to be targeted for late 2024. In parallel, the JV will
undertake various studies to define optimal development plans for the
Pensacola discovery.

 

In line with the Company's stated strategy, Deltic has also commenced a formal
process to pursue the value crystallisation options that exist for the
Pensacola discovery which may involve monetisation and/or farm down of its
equity interest in the Pensacola discovery.

 

Qualified Person's Statement:

Andrew Nunn, a Chartered Geologist and Chief Operating Officer of Deltic, is a
"Qualified Person" in accordance with the AIM 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

 Associated Gas:                              Associated Gas is a natural gas found in contact with or dissolved in crude
                                              oil in the reservoir

 BCF:                                         Billion Cubic Feet

 Estimated Ultimate Recovery or 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

 Gas Initially in Place:                      The quantity of gas that is estimated to exist originally in naturally
                                              occurring accumulations before any extraction or production

 mD:                                          A millidarcy (mD (https://glossary.slb.com/en/terms/m/md) ) is one thousandth
                                              of a darcy and a standard unit of measure of permeability

 MMBO:                                        Million Barrels of Oil

 MMBOE or million barrels of oil equivalent:  million barrels of oil equivalent. Gas is converted at 5.98 BCF to 1 MMBOE

 Oil Initially in Place:                      The quantity of oil that is estimated to exist originally in naturally
                                              occurring accumulations before any extraction or production

 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

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

 WI:                                          Working Interest

 

**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                                                              Tel: +44 (0) 20 7390 0230
 Adviser)

 Patrick d'Ancona / Finlay Thomson / Kendall Hill

 

 

 

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