REG - Orcadian Energy PLC - Seismic acquisition and licensing agreement

Orcadian EnergyAnnouncement

15/06/2022 07:00

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RNS Number : 8882O  Orcadian Energy PLC  15 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.

 

 

 

15 June 2022

Orcadian Energy plc

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

 

 

Seismic acquisition and licensing agreement

 

Orcadian Energy (AIM:ORCA), the low-emissions North Sea oil and gas
development company, is pleased to announce a seismic licensing deal with the
energy data company TGS. The agreement will provide Orcadian with high quality
seismic data, revealing the reservoir structures and even the likely fluid
type. The deal with TGS ensures that Orcadian will be able to use the best
data available to evaluate the multitude of development opportunities and
prospects within its North Sea portfolio.

Highlights

·    Orcadian will gain access to 2,070 sq km of newly reprocessed and
interpreted, high quality 3D seismic data covering the bulk of its licences
and enabling evaluation of nearby open acreage in the upcoming 33(rd) round;

·     Near term costs have been deferred and future payments to TGS will
largely derive from a 1% royalty on production;

·     TGS will, subject to Pilot FDP approval, acquire 100 sq km of new
seismic over the important Elke and Narwhal discoveries;

·     The North Sea Transistion Authority ("NSTA") has confirmed that
acquisition of this data will satisfy the Phase B work commitment on P2482,
Orcadian has requested that NSTA allows P2482 to continue into Phase B.

Orcadian has 79MMbbls of 2P reserves in the Pilot field, 78MMbbls of 2C
Resources in Elke, Narwhal and Blakeney discoveries, and 191MMbbls of
Prospective Resources across its Western Platform licences. Orcadian's
understanding of Pilot and Blakeney has already been much improved from
interpretation of the data already licensed from TGS. This deal will enable
Orcadian to improve its understanding of the full potential of its licences
and the surrounding areas to the same level, in advance of the forthcoming
33(rd) Licensing Round.

TGS seismic data

TGS owns three surveys over Orcadian's licences on the Western Platform:

·    the "Blakeney" survey which covers all of blocks 21/22a, 21/26a,
21/27a, and 21/27b. Orcadian has already licensed 205 sq km to enable
interpretation of Pilot, Blakeney, Bowhead, and Feugh. This survey was shot in
2012 and was reprocessed in 2019/2020 to benefit from ongoing advances in
processing technology as well as to focus on the Tay hydrocarbon bearing
horizons;

·      the "Catcher North" survey covering all of 21/28 which was shot
in 20112/13; and

·      the "Catcher" survey  covering all of 28/3a which was shot in
2011.

A map of these surveys and their relationship to Orcadian's acreage holdings
can be downloaded at this link: https://bit.ly/TGS-Orcadian-seismic
(https://bit.ly/TGS-Orcadian-seismic)

Detais of the Transaction

Under the terms of the transaction TGS has agreed:

·      to defer, until Pilot FDP approval, a significant portion of the
seismic licensing fees due under the existing licence arrangements;

·   to reprocess the "Catcher" and "Catcher North" surveys using the same
processing sequence as successfully deployed on the "Blakeney" dataset;

·      to licence a further 1,865 sq km of seismic data to Orcadian,
under a two-company group licence;

·      subject to Pilot FDP approval, to acquire at least 100 sq km of
new seismic over Narwhal and Elke; and

·      to deliver QI (Quantative Interpretation) products, to carry out
seismic modelling and interpret the seismic over the entire area.

In return, Orcadian will grant TGS a 1% royalty on proceeds from future
production from its Western Platform licences. On Pilot FDP approval, and
concurrent with TGS's commitment to acquire seismic over Elke and Narwhal,
Orcadian will pay the outstanding prior financial commitment to TGS. The
royalty terms are designed to afford Orcadian maximum flexibility in future
fund-raising to stimulate development of this key future hub for UK energy.

The Directors believe this innovative licensing arrangement will enable
Orcadian to meet future licence commitments, enhance its understanding of the
regional geological setting, and to quantify prospectivity across the entire
Western Platform project area; and to do so using the very best available
data, reprocessed using the most appropriate parameters to image the Tay
reservoirs. This arrangement is intended to create a long-term alignment of
interests as well as a close technical working relationship between Orcadian
and TGS.

Phase B of P2482

NSTA has agreed to amend the Phase B work programme for Licence P2484, such
that new seismic acquired by TGS and licenced by Orcadian under this
arrangement will satisfy the amended work commitment. Accordingly, Orcadian
has formally requested that P2484 continue into Phase B.

Farm Out of Carra

As announced on 11 October 2021, Orcadian has entered into non-binding heads
of agreement with Carrick Resources Limited on the announced farm-out of the
Carra prospect. Orcadian confirms it is working with Carrick to progress the
farm out agreement and further updates will be available in due course.

 

Steve Brown, Orcadian's CEO, said:

"We are delighted to have reached this agreement with TGS and look forward to
further cementing our close working relationship.

 

The agreement enables us to use the very best subsurface data whilst giving us
access to recent advances in seismic processing to extract understanding from
that data. A good subsurface understanding is the foundation upon which we
will build our success and securing access to the best data available is
essential. We are delighted that TGS have the confidence in our project to
enter into this deal under which the vast majority of their return will depend
on us successfully taking the project into production. We now have licensed,
what we believe is the highest quality data across all of our Western Platform
licences, whilst minimising value dilution to our shareholders. This deal
ensures a long term alignment between TGS and Orcadian as we seek to make the
most of the development and exploration potential of our acreage."

 

 

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. 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.

About TGS

TGS provides scientific data and intelligence to companies active in the
energy sector. In addition to a global, extensive and diverse energy data
library, TGS offers specialized services such as advanced processing and
analytics alongside cloud-based data applications and solutions.

 

About Carrick Resources Limited

Carrick recently completed the sale of its 50% operated interest in the
adjacent Block 21/28b (Licence P2451) containing the Fyne Field.

 

 

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