Orcadian Energy PLC (AIM:ORCA)'s share price has jumped 65% after the company announced a preliminary agreement with an unnamed potential operator of its key North Sea asset.
The deal, if finalised, would focus on developing the Pilot field, one of the largest untapped areas in the Central North Sea.
The operator would take over 81.25% of the project and become its new manager.
The agreement is not completed and depends on several conditions, including due diligence and regulatory approvals.
Both companies have until 30 November to formally agree the terms.
If the deal goes through, Orcadian will keep an 18.75% stake in the project and the operator will cover all costs until the first oil is produced.
After that, the AIM-listed group will contribute its share of the expenses.
If everything goes as planned, Orcadian could receive up to US$200,000 initially and an additional US$3 million upon project approval.
However, the company noted that its working capital is limited, with only around £90,000 in cash and a monthly spend rate of less than £20,000.
At 9.04 am, the stock was changing hands for 5.76p, up 2.26p.