Deltic Energy PLC (AIM:DELT) assets and operations continue to look strong and are advancing, the company highlighted in a stock market statement.
At the same time, the small-cap North Sea oil and gas firm is advancing funding efforts, and, notwithstanding what it called “extremely challenging conditions”, management sees a slight improvement in sentiments toward the industry in the UK.
“As recent events have demonstrated, it has never been clearer that a secure domestic energy supply is a vital national asset and Deltic's work could be a key contributor to delivering that for the UK in the coming years,” chief executive Andrew Nunn said in a statement.
Operations
Deltic told investors that the Selene discovery, its flagship project, where its partnered with Shell, post-well analysis and pre-Field Development Planning work is underway.
An updated economic model estimates a net present value (NPV10) of $58 million net for Deltic’s stake in the project.
Meanwhile, within the same block, it see the Endymion prospect as a low-cost upside opportunity, with prospective resources estimated at 70 billion cubic feet (BCF).
Deltic has also begun a farm-out process for the separate Blackadder licence, which contains an estimated 165 BCF of prospective resources.
The company is evaluating funding options, including potential farm-downs and asset sales, to support its medium-term commitments.
Relative stability
“There has now been a period of stability in the UK oil and gas industry following the UK Budget in October 2024, and while the overall environment remains extremely challenging, we believe there has been a slight improvement in sentiment towards the sector,” Nunn said.
He added: “The magnitude of the divergence between Deltic's share price and the company's valuation of its stake in the Selene Gas Project is clearly a cause of frustration for both shareholders and the board, especially given the quality of the asset and commitment of the JV partners.
“The board considers that actions taken in late 2024 to reduce ongoing G&A costs, and Deltic's previously communicated year end cash position of £1.4m, provides the board with sufficient flexibility to progress potential funding options to enable the business to move to Selene FID and beyond.”