Deltic Energy PLC (AIM:DELT) has given investors key insights into the Selene project’s economics, as it heads towards development.
It comes as the drill programme for the discovery well has now been completed and the rig demobilised earlier this week.
Deltic told investors that the total well costs are estimated at $48 million, which comes below the cap stipulated in the small-cap explorer’s farm-out arrangements – therefore, Deltic is not expected to incur any additional cash costs from the programme.
Shell, the project operator, is advancing Selene into the next phase of its licence term, as key engineering and environmental studies are undertaken ahead of a Final Investment Decision (FID).
It is envisaged as a comparatively low-cost work development comprising two horizontal wells, and a subsea pipeline to the Barque field infrastructure some 20 kilometres away.
An updated economic model, by Deltic, anticipates gross gas sales of $1.50 billion over the project’s life - with gross pre-tax NPV10 estimated at US$288 million, or US$61 million net after tax. This projection factors in the recently updated UK fiscal regime.
“The decision to move into the second term of the licence kicks off an incredibly busy period, as we support the operator through the various engineering, environmental and regulatory workstreams that need to be pulled together to support a potential Final Investment Decision,” Deltic chief executive Andrew Nunn said in a statement.
“The workstreams now in train are an important signal to our investors as you wouldn't commence this process if you didn't believe there was a material commercial return at the end. We look forward to updating the market in due course."