Deltic Energy PLC (AIM:DELT) said it expects to drill two wells in the North Sea next year following the success at Pensacola in partnership with Shell PLC (LSE:SHEL, NYSE:SHEL).
Pensacola has been transformational for the company, Deltic added, with original expectations now doubled to 99 million barrels of light oil.
“At current estimated volumes, Pensacola is the largest discovery in the southern North Sea (SNS) in a decade and arguably one of the most significant discoveries in the North Sea in many years,” it said in a statement alongside its latest half-year results.
Deltic added it is working on a farm-down of an element of its interest in Pensacola that will allow it to retain exposure to its cash flow.
Shell and Deltic have moved on to assessing development concepts and are working towards an appraisal well to be drilled in the final quarter of 2024.
That will be the second of two North Sea wells planned for next year, with an exploration well at Selene also scheduled.
At Selene, well design, planning, rig procurement and other key preparations to support drilling operations are in train, the company said, with long lead items in the process of being ordered.
A geophysical site survey over the proposed well location has already commenced.
“We also anticipate the rig contract for Selene to be put in place in the coming months.”
Elsewhere in the North Sea, an extensive work programme has been progressed on two licences acquired with Capricorn Energy that have "multiple prospects and leads in the carboniferous with a total estimated P50 gas-initially-in-place of more than 2.6 trillion cubic feet."
Deltic is also waiting to hear if it has been successful in the UK's 33rd licensing round that took place in January.
Graham Swindells, chief executive, said: “The Windfall Tax and political risk have also been factors which have created uncertainty, albeit the investment allowance associated with the Energy Profits Levy continues to make the economics associated with investing in Deltic projects very attractive.
“The success at Pensacola also now means that we expect to be drilling wells at both Selene and Pensacola next year.”
Interim losses were £1.1 million with cash at the end of the half-year standing at £9.1 million after a £12.8 million net cash cost for Pensacola of which £10 million was paid in the period just ended.