Deltic Energy PLC (AIM:DELT) has revealed the initial success of the Selene exploration well, in the North Sea, whilst at the same time announcing a strategic review that aims to take the company in a new direction.
At Selene, JV partner and operator Shell has now completed drilling down to a total depth of 3,540 metres – encountering a 160-metre section of Leman Sandstone, which will now be assessed.
Deltic described the initial findings as “encouraging” but said that further information would be provided after the well has had logging and sampling operations.
Strategic review
Deltic's new chief executive, Andrew Nunn, stated that the board is evaluating opportunities in regions with more favourable oil and gas policies to create value for shareholders while balancing geological, operational, and political risks.
Under Nunn, who took the reins last week, the company intends to eliminate spending on non-core UK assets as part of its revised strategy.
Deltic also seeks to focus over the next twelve months on the “extraction of value from its existing core UK assets.”
Meanwhile, the strategic priorities over the next year will see Deltic identify overseas opportunities that provide earlier cash flows and shorter cycles to ‘value crystallisation’.
Whilst the emphasis is on cash flow opportunities, Deltic added that high-impact exploration will always be an integral part of Deltic's DNA, and the company will also continue to selectively pursue these types of opportunities that offer significant upside for shareholders in the medium to longer-term
“The key changes we have announced today, in addition to a raft of other less significant changes, will have an immediate and material impact on the company's operational expenditure and are expected to result in savings of 40% compared to costs previously budgeted by management for 2025,” Nunn added.
“These savings are key to extending the time period in which to identify and incubate those new opportunities that we believe will help towards stabilising the business and providing a platform for future growth supporting our objective of creating positive returns for shareholders."
UK portfolio
Deltic told investors it had received interest from third parties for a farm-in on the Blackadder licence, which like Selene is also in the Southern North Sea.
To manage costs, the company intends to defer work programs on this licence until mid-2025.
Deltic also noted that it has entered into discussions with the North Sea Transition Authority (NSTA) regarding its Syros and Dewar licences, with potential changes in work programs and cost management strategies.
Other changes
Deltic noted that non-executive director Peter Cowley has agreed to step down from the Board of Deltic with immediate effect, the company said that there are no plans to recruit a replacement in the shorter term.
It also reported that it has reviewed the full range of advisory services it utilises, including its broker arrangements. Going forward, Canaccord will assume the role of sole broker for the company. Allenby Capital will continue in its role of Nominated Advisor.