REG - Deltic Energy PLC - Selene Gas Project Update

Deltic EnergyAnnouncement

15/04/2025 07:02

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RNS Number : 9876E  Deltic Energy PLC  15 April 2025

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

 

15 April 2025

 

 

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

Selene Gas Project Update

 

Deltic Energy Plc (https://delticenergy.com/) , the AIM quoted natural
resources investing company, is pleased to provide the following operational
and commercial update in relation to the Selene Gas Project in the UK Southern
North Sea:

 

Highlights

 

·    Deltic now estimates Gross 2C Contingent Resources of 174 BCF at
Selene, a 33% increase on earlier estimates

·    Analysis of core samples from well 48/8b-3Z is now substantially
complete

·    Porosity and permeability characteristics improved over previous
assumptions

·    Reservoir modelling indicates enhanced production potential from key
B-sand interval

·    Updated post-tax NPV10 of USD$83M net to Deltic at 80 pence per therm
gas price and USD$114M at 100 pence per therm gas price

 

Selene Gas Project - Licence P2437

 

Deltic has a 25% non-operated interest in the Shell-operated Selene gas
discovery in the Southern North Sea ("SNS").

 

Following the successful drilling of the well in 2024, the Joint Venture
("JV") partners unanimously voted to move into the second term of the licence
and committed to the various engineering, commercial and regulatory workflows
required to support a Field Development Plan ("FDP") and a future Final
Investment Decision ("FID") scheduled for early 2027.

 

Reservoir Properties

 

The licence Operator, Shell UK Ltd, has provided porosity and permeability
measurements on 176 core plugs taken from drill core samples over the Leman
B-Sand, which is the key producing interval within the much thicker Leman
Sandstone package.

 

The core analysis indicates significantly better porosity and permeability
than previously assumed in Deltic's P50 volumetric estimates and reservoir
modelling. A comparison of the updated B-sand porosity assumptions based on
the core analysis and the previously utilised assumptions are summarised in
the table below:

 

 

 Reservoir Characteristic        Units     Poro-Perm Assumptions           % Improvement

                                           Time post-well completion
                  1 Month        6 Months
 B-Sand Porosity  Low            %         11              13              18
                  Mid            12                        14.5            21
                  High           13                        16              23
 Average          Mid            mD(1)     1.6             2.5             56

 Permeability     Case

(                1) Klinkenberg corrected for Net Overburden
Pressure

 

The improved view of porosity has been incorporated into Deltic's static
subsurface model and our estimates of gas-initially-in-place (or "GIIP") for
the Selene structure.

 

Reservoir Modelling Update

 

Incorporating the new porosity and permeability data into Deltic's dynamic
reservoir model has resulted in improved overall recovery factors, higher
initial flow rates, extended plateau production periods and increased
estimates of gas recovered over a 20-year production life.  A comparison of
our 6 month post-well view with the previous reservoir modelling is set out
below:

 

 Mid-Case                                                  Units      Assumptions                     % Improvement

 Reservoir Model & Outputs(1)                                         Time post-well completion
                              1 Month                      6 Months
 2 Well Development           Initial Production Rate      Mmscf/day  50              70              40

 Gas exported via Barque PB
                              Production Plateau           Months     8               18              125
                              Technically Recoverable Gas  BCF        130             176.7           36
                              Implied P50 Recovery Factor  %          50              57              12

(  1) Field production metrics are reported on a Gross basis, reflects
mid-case (ie P50) reservoir assumptions

 

Gas Quality Analysis

 

Analysis of the gas samples collected from the 48/8b-3Z well have proven the
presence of a very dry, methane dominated natural gas with nominal
concentrations of contaminants including CO(2) and N(2) and our expectation is
that gas produced from Selene will require minimal processing to reach
National Grid entry specifications.

 

Updated Volumetric Estimate

 

The core analysis data has allowed Deltic to refine and update its volumetric
estimates for the Selene Gas Project utilising the recently delivered porosity
data from the core samples and updated recovery factors from the reservoir
modelling.

 

 Contingent Resources(1)             %

 [Development Pending]               Improvement(2)
 Units     BCF       BCF

           Gross     Net to Deltic
 1C        128       32              35
 2C        174       44              33
 3C        233       58              32

               (1) Deltic's in-house estimates of Contingent
Resources(                 )

(               2) % Improvement compared to EUR volumes announced via
RNS on 31 October 2024

 

Given the commerciality of the project, maturity of the technical analysis and
ongoing pre-development workflows it was considered appropriate to move from
using Estimated Ultimate Recovery (or 'EUR') to Contingent Resources -
Development Pending to describe the status of the Selene project.

 

Updated Economic Model & Project Valuation

 

Given the material uplift in recoverable gas volumes, the economic model for
Selene has been updated from that previously announced in the Company's
announcement released on 11 March 2025.  Deltic's base case development
assumptions remain unchanged and incorporate a two well development with a new
normally unmanned installation tied back to existing production infrastructure
on the Barque field via a new c. 20km subsea pipeline.

 

This model reflects the revised volumetrics and production profiles and has
been run at a 80 pence per therm gas price reflecting recent average National
Balancing Point ('NBP') and a 100 pence per therm gas price which more closely
reflects the average NBP gas price over the last six months.

 

 Assumptions                    Units         Value*
 Deltic Working Interest        %             25
 Gross 2C Contingent Resources  BCF           174
 Initial Field Production Rate  MMscf/day     70
 Gas Price                      pence/therm   80 & 100
 First Gas                      Year          2029
 Cost per BOE                   USD$          $10 CAPEX

                                               &

                                               $15 OPEX
 Fiscal Regime                  As per Budget announced

                                30 October 2024

 

 Economic Evaluation              Units  Value @ 80 p/therm  Value @ 100 p/therm
 Gross Gas Sales (cumulative)     USD$   $2.1 billion        $2.7 billion
 NPV10 (pre-tax, gross)           USD$   $430 million        $626 million
 NPV10 (post-tax, net to Deltic)  USD$   $83 million         $114 million
 Payback Period                   Years  In year 2           In year 2 of

                                         of production       production
 Internal Rate of Return          %      42%                 51%

 

 

Andrew Nunn, Deltic CEO, commented:

 

"The six month post discovery checkpoint is always a key stage gate on the
path from a gas discovery to a gas development project, and as the technical
work gathers momentum we narrow the inherent uncertainties of a new find and
get greater clarity on the discovery and its potential. The integration of the
core data into the volumetric and economic analysis has led to a significant
refinement and improvement in Deltic's understanding of the Selene asset which
continues to impress. This updated understanding will be critical as the JV
moves forward into project scoping and early project design workflows. The
circa 45% increase in the NPV10 of Selene net to Deltic is particularly
pleasing, especially within the context of the current market cap of the
Company.

Recent global events have reinforced the case for maximising the benefits from
the United Kingdom's domestic resources.  With continued government support
for the development of new fields on existing licences there appears to have
been a realisation that, while we continue to consume hydrocarbons as a
society, then the focus should be on maximising the proportion of 'good
barrels' in the energy mix. These barrels are, or will be, produced locally
and, in the case of newer developments, from facilities which are specifically
designed with a net zero target in mind. Hydrocarbons produced in the UK have
a lower emissions footprint than imported oil and gas and are operated under
the strictest environmental regulations. They also support high quality UK
jobs and provide important tax revenues to the Exchequer.

We continue to explore various avenues as we work to secure the funding
required to maintain our interest in the Selene project as the JV works toward
a Final Investment Decision in early 2027. We believe that it has never been
more important for the UK to develop and maximise the benefit of its own
resources, like Selene, and thereby maximising the proportion of 'good
barrels' in the mix as we become increasingly dependent on imported oil and
gas."

 

**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                                                            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

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.

 

Standard

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

 

Glossary of Technical Terms

 BCF:                                        Billion Cubic Feet.

 BOE                                         barrels of oil equivalent. Gas is converted at a conversion rate of 6,000
                                             standard cubic feet of gas per BOE.

 Contingent Resources - Development Pending  Discovered, potentially recoverable resources that are not yet considered
                                             commercially viable due to contingencies, but where development is actively
                                             being pursued and is expected within a reasonable timeframe with a high chance
                                             of success.

 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.

 GIIP                                        the estimated total volume of natural gas contained within a reservoir before
                                             any extraction or production takes place.

 MMscf:                                      million standard cubic feet.

 NPV10:                                      estimated net present value using a discount rate of 10%.

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

 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.

 Therm:                                      the energy equivalent of approximately a hundred cubic feet of natural gas.

 

 

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