Orcadian Energy PLC (AIM:ORCA) shares fell around 16% in Monday’s early deals after the UK government denied an application to extend a North Sea licence (Licence P2320) which expired on 14 May.
As a result of the decision, certain asset divestment agreements will no longer proceed.
The company noted that it had been in farm-out negotiations with multiple counterparties that could have supported the proposed drilling of a well, though such talks were conducted under non-compete arrangements which Orcadian believes should result in the company being involved in any future ventures by those companies to reapply for that licence area in the future.
"Whilst we obviously would have preferred that NSTA had extended Phase A of P2320,” said chief executive Steve Brown, “we are pleased to have progressed discussions on the prospects we had identified in the area with multiple potential partners, who have been willing to agree non-compete arrangements with us.
“We are determined to catalyse the drilling of the prospects we have identified and to deliver on our Central Obligation to Maximise Economic Recovery from the UKCS whilst continuing to minimise the potential emissions from any future development."
In London, Orcadian shares were down 1.02p or 16.32% changing hands at 5.23p.