REG - Orcadian Energy PLC - Memorandum of Understanding with SLB

Orcadian EnergyAnnouncement

29/11/2022 07:00

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RNS Number : 8484H  Orcadian Energy PLC  29 November 2022

 

 

 

29 November 2022

Orcadian Energy plc

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

 

Memorandum of Understanding with SLB

 

Highlights

·  Orcadian has entered into a binding Memorandum of Understanding (MoU)
with SLB (formerly Schlumberger) to deliver core services for the wells on the
Company's Pilot project.

·    SLB made a compelling commercial and technical proposal with a strong
focus on decarbonisation.

·    The parties now plan to develop a comprehensive Project Agreement for
provision of the services.

Steve Brown, Orcadian's CEO, commented:

"We are delighted to be working with SLB to deliver the Pilot wells. Pilot is
currently planned to be developed with thirty-four wells; and delivering those
wells for the least cost with the right completion technologies to maximise
sweep of the reservoir is critical to the success of the Pilot development.

"Pilot is a key UKCS development project which should pave the way for the
industry to unlock up to 3 billion barrels of viscous oil discoveries on the
UKCS. By adopting leading technologies, such as polymer flooding and floating
wind power, we believe we can deliver these developments with ultra-low
emissions that will restore the UKCS to its rightful place as the leading
energy basin in the world as we deliver a Secure Transition.

"The early involvement of key supply chain partners such as SLB and Petrofac
is essential to ensure that we access the very best technologies and
capabilities that the industry has to offer enabling us to successfully
deliver the Pilot project."

 

Rob Fox, SLB's MD for UK & Europe, said:

"SLB is committed to supporting Orcadian Energy in securing accessible and
sustainable energy to meet growing energy demand in the UKCS via the Pilot
project. We are excited to have the opportunity to work with Orcadian and
believe our vast portfolio of energy transition technologies will assist in
delivering a highly innovative and decarbonised development project at Pilot.

"Aligned with SLB's new focus on delivering energy solutions at the lowest
possible emissions footprint, we believe this prospective project is a
tremendous example of how any new North Sea field should be delivered. We look
forward to helping Orcadian Energy unlock the value of this superb project."

 

Background

Orcadian and Petrofac, Orcadian's selected well operator, approached the well
services market in July this year to elicit proposals from well service
contractors to support the Pilot field well construction programme. SLB made
an especially compelling commercial and technical proposal with a strong focus
on decarbonisation.  This will ensure alignment of interests between Orcadian
and SLB, and provide a strong foundation for the overall project financing and
development.

In oil and gas development, we believe nothing matters quite as much as the
well-reservoir interface and the well completion itself. Partnering with SLB,
which is a global technology company that drives energy innovation and has a
wide range of capabilities and technologies, should ensure the successful
delivery of the Pilot project.

Petrofac has supported Orcadian since 2018, having assisted the Company in the
concept select process, and will be appointed as well operator by Orcadian.

Project Agreement

Orcadian and SLB now plan to develop a comprehensive Project Agreement to
detail the terms and conditions for the provision of core services.  The
finalisation of the Project Agreement is subject to, amongst other items due
diligence and drafting of legal documents, so it is possible that the Project
Agreement may not be executed, but the Directors have every expectation that
it will be.

In the near term, the Company and SLB also intend to progress a project value
optimisation process, SLB will be engaged under a separate consulting
arrangement. The intention of this process is to deliver a plan for the
drilling and completion of the Pilot wells which will maximise economic
recovery and minimise emissions from both the well construction process and
the operation of the downhole pumps on the wells.  The Directors believe that
having access to the full range of technologies which SLB has to offer will
help immeasurably in the process of finalising the Field Development Plan.

The Company also intends to include an incentive arrangement for the
contracting partners focussed on delivering the optimum number of wells to
maximise efficient sweep of the reservoir, at the least cost, and with the
lowest emissions possible.

Additional Commitments

In recognition of the fact that SLB is committing significant resources to the
finalising of the Project Agreement, Orcadian has undertaken not to award
contracts for the core services to third parties. Furthermore, if Orcadian
elects to transfer the operatorship of Licence 2244 to a new operator, it is
required to notify SLB and to novate Orcadian's rights and obligations under
this MOU to the new operator.

Investor Meet Company Thursday 1st December

Orcadian Energy would like to invite all interested investors to attend a
Company presentation hosted by Investor Meet Company at 11am GMT on Thursday
1(st  )December 2022.  After the presentations there will be a short
Q&A session, however participants are asked to provide questions via the
"Investor Meet" platform no later than 9am on Wednesday the
30(th) November.

 

Interested parties should register for the event via the following link:
https://www.investormeetcompany.com/orcadian-energy-plc/register-investor
(https://www.investormeetcompany.com/orcadian-energy-plc/register-investor)

 

Investors who already follow Orcadian Energy on the Investor Meet Company
platform will automatically be invited.

Presentation materials will also be uploaded to the Company website
www.orcadian.energy (http://www.orcadian.energy) after the event.

 

 

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 (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

 

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. Orcadian's proposed low emissions,
field development plan for Pilot is based upon a Floating Production Storage
and Offloading vessel (FPSO), with over thirty 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 field
emissions at the low end of the lowest 5% of global oil production.

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