Deltic Energy PLC (AIM:DELT) has told investors it will retain the most advanced acreage from the Capricorn exploration venture and leave others, as the partner exits the North Sea projects.
Capricorn has now confirmed its exit from the licences in which its partnered with Deltic, following its previous strategy decision to leave all its exploration projects outside of Egypt.
Deltic said it will withdraw from three licences (P2560, P2561 and P2562) but will retain two (P2567 and P2428) that host the Cadence and Cupertino projects respectively, whilst highlighting the "significant prospectivity" shown in the technical work programmes completed by Capricorn on behalf of the joint venture.
The small-cap explorer has been fully carried by Capricorn through nearly US$10mln of technical work to date for these assets, including the ‘pre-funding’ of nearly 700 square kilometres of new 3D seismic as well as the reprocessing of a number of legacy 3D seismic surveys.
This work has so far yielded 17 leads and prospects representing more than 2.6 trillion cubic feet of ‘in-place’ gas resources, which Deltic described as "analogous with the Pegasus and Andromeda discoveries" located in the vicinity, immediately to the south.
After taking full ownership of these projects following Capricorn’s exit, Deltic is expected to launch a new partnering process to advance the licences (which on current terms expire in November 2023 and March 2024, respectively).
"While we would have preferred to continue in partnership with Capricorn on these exploration licences, Capricorn has recently changed strategic direction,” Deltic chief executive Graham Swindells said in a statement.
“Our extensive work together has advanced our understanding of the potential of the area; further demonstrated the excellent prospectivity present on the two most advanced licences and allowed us to focus on those licences showing excellent potential. We look forward to advancing the key exploration prospects on this acreage."
The Capricorn venture has represented significant potential for Deltic, albeit it has been under the radar compared to its Shell-led projects which have delivered the Pensacola discovery.
Deltic meanwhile retains a bullish view of the southern North Sea.
"Following our success earlier this year with the Pensacola gas and oil discovery, Deltic remains committed to exploring in the Southern North Sea which has the potential to provide high quality UK based employment, tax revenues and energy security while at the same time offsetting higher carbon intensity imports as the UK continues its transition towards a net zero future,” Swindells commented.