Deltic Energy PLC (AIM:DELT) told investors that the Selene gas discovery continues to impress with the latest analysis resulting in a resource upgrade.
Contingent resources have increased by 33% to 174 billion cubic feet.
In the analysis, reservoir porosity and permeability were better than previous assumptions. modelling indicates higher initial production, longer plateau periods and greater recovery rates.
A new ‘mid-case’ production model now supports a 70 million standard cubic feet per day initial rate. And, updating the valuation estimates lifts NPV (net to Deltic) range to US$83 million and US$114 million depending on gas prices (80p per therm or 100p per therm).
Deltic chief executive Andrew Nunn highlighted that the improved understanding will be critical as the project moves forward into scoping and early design workflows.
"The six-month post-discovery checkpoint is always a key stage-gate on the path from a gas discovery to a gas development project, and as the technical work gathers momentum we narrow the inherent uncertainties of a new find and get greater clarity on the discovery and its potential,” Andrew Nunn said in a statement.
Moreover, he said the 45% increase in Selene’s NPV is particularly pleasing, especially compared to Deltic’s current market cap – at 3.82p, the company is valued in the market at just £3.56 million.
Nunn added: “Recent global events have reinforced the case for maximising the benefits from the United Kingdom's domestic resources.
“With continued government support for the development of new fields on existing licences, there appears to have been a realisation that, while we continue to consume hydrocarbons as a society, then the focus should be on maximising the proportion of 'good barrels' in the energy mix.
“These barrels are or will be, produced locally and, in the case of newer developments, from facilities which are specifically designed with a net zero target in mind.
“Hydrocarbons produced in the UK have a lower emissions footprint than imported oil and gas and are operated under the strictest environmental regulations. They also support high-quality UK jobs and provide important tax revenues to the Exchequer.”
Nunn, meanwhile, told investors that the company continues to explore various avenues, to secure the funding required to maintain our interest in the Selene project as the Shell-led JV works toward a Final Investment Decision in early 2027.