REG - Orcadian Energy PLC - Draft FDP and Farm-out Process Update

Orcadian EnergyAnnouncement

13/06/2022 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220613:nRSM5523Oa&default-theme=true

RNS Number : 5523O  Orcadian Energy PLC  13 June 2022

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 (MAR). Upon the publication of this announcement via
Regulatory Information Service (RIS), this inside information is now
considered to be in the public domain.

 

 

 

13 June 2022

Orcadian Energy plc

("Orcadian Energy", "Orcadian" or the "Company")

 

 

Draft FDP and Farm-out Process Update

 

Orcadian Energy (AIM:ORCA), the low-emissions North Sea oil and gas
development company, is pleased to provide the following update.

Highlights:

·    The Company has submitted a draft Field Development Plan for the Pilot
oilfield to the North Sea Transition Authority (NSTA)

·     A structured farm-out process has been initiated for the Pilot
oilfield

·     New tax regime has transformed economics of North Sea investment for
tax-paying companies.

Summary

Orcadian has 79MMbbls of 2P reserves in the Pilot oilfield and the Pilot
oilfield Field Development Plan ("FDP") builds upon work done in the concept
select process which culminated in NSTA sending a "letter of no objection" to
the low-emissions concept selected by Orcadian, as announced on 1 December
last year.

Orcadian's proposed low emissions, FDP for Pilot is based upon a Floating
Production Storage and Offloading vessel (FPSO), with thirty-four wells to be
drilled by a Jack-up rig through a pair of well head platforms and provision
of power from a floating wind turbine. Emissions per barrel produced are
expected to be about an eighth of the 2020 North Sea average, and less than
half of the lowest emitting oil facility currently operating on the UKCS. On a
global basis this places the Pilot oilfield emissions at the low end of the
lowest 5% of global oil production. The draft FDP will be discussed and agreed
between NSTA and Orcadian over the coming months but it cannot be approved
until the associated development finance has been finalised. The structured
farm out process, that has been initiated for Pilot, is a key part of that
process.

At the same time, the Directors understand that the introduction of the Energy
Profits Levy ("EPL") by the UK Government last month, has radically improved
the economics of a farm-in deal for some potential farminees. Whilst the EPL
did introduce a further tax on profits from UK oil and gas companies, it also
introduced significant investment allowances to encourage oil and gas
companies to reinvest their profits to support the economy, jobs and UK energy
security. Accordingly, for companies that pay both EPL and UK ring fence
corporation tax (a modified form of corporation tax only payable by the UK oil
and gas industry), the after-tax cost of development could be reduced by up to
75% when compared with a non-tax paying company.  The Board believe that this
will make investment in the development of the Pilot oilfield an increasingly
attractive opportunity.

There is more information on the workings of the UK ring fence tax system, and
the impact of the EPL, available in a Treasury briefing note here:
https://bit.ly/Treasury_EPL (https://bit.ly/Treasury_EPL)

Steve Brown, Orcadian's CEO, said:

"Submission of the draft FDP is a further important milestone for the Pilot
development and highlights the maturity of the project. Our focus on
minimising emissions means that the project will be especially attractive to
companies that wish to drive down their emissions intensity whilst the
introduction of the investment allowances as part of the Energy Profits Levy
will surely incentivise operators to double down on investing in domestic
energy security. We look forward to a heightened level of interest in our
project and providing further updates as the process progresses."

 

For further information on the Company please visit the Company's website:
https://orcadian.energy (https://orcadian.energy)

 

 

Contact:

 

 Orcadian Energy plc                                  + 44 20 7920 3150
 Steve Brown, CEO

 Alan Hume, CFO
 WH Ireland (Nomad and Joint Broker)                  +44 20 7220 1666
 Katy Mitchell /  Andrew de Andrade (Nomad)

 Harry Ansell / Fraser Marshall (Corporate Broking)

 Shore Capital (Joint Broker)                         +44 20 7408 4090
 Toby Gibbs / Liam Zabludowicz (Advisory)
 Tavistock (PR)                                       + 44 20 7920 3150
 Nick Elwes / Simon Hudson                            orcadian@tavistock.co.uk (mailto:orcadian@tavistock.co.uk)
 Charlesbye (PR)                                      + 44 7403 050525
 Lee Cain / Lucia Hodgson

 

 

Notes to editors

 

About Orcadian Energy

Orcadian is a North Sea focused, low emissions, oil and gas development
company. In planning its Pilot development, Orcadian has selected wind power
to transform oil production into a cleaner and greener process. The Pilot
project is moving towards approval and will be amongst the lowest carbon
emitting oil production facilities in the world, despite being a viscous
crude. Orcadian may be a small operator, but it is also nimble, and the
Directors believe it has grasped opportunities that have eluded some of the
much bigger companies. As we strike a balance between Net Zero and a
sustainable energy supply, Orcadian intends to play its part to minimise the
cost of Net Zero and to deliver reliable organic energy.

Orcadian Energy (CNS) Ltd ("CNS"), Orcadian's operating subsidiary, was
founded in 2014 and is the sole licensee of P2244, which contains 78.8 MMbbl
of 2P Reserves in the Pilot discovery, and of P2320 and P2482, which contain a
further 77.8 MMbbl of 2C Contingent Resources in the Elke, Narwhal and
Blakeney discoveries (as audited by Sproule, see the CPR in the Company's
Admission Document for more details). Within these licences there are also 191
MMbbl of unrisked Prospective Resources. These licences are in blocks 21/27,
21/28, 28/2 and 28/3, and lie 150 kms due East of Aberdeen.  The Company also
has a 50% working interest in P2516, which contains the Fynn discoveries.
P2516 is administered by the Parkmead Group and covers blocks 14/20g and
15/16g, which lie midway between the Piper and Claymore fields, 180 kms due
East of Wick.

Pilot, which is the largest oilfield in Orcadian's portfolio, was discovered
by Fina in 1989 and has been well appraised. In total five wells and two
sidetracks were drilled on Pilot, including a relatively short horizontal well
which produced over 1,800 bbls/day on test.

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  MSCBDGDLSDBDGDB