Deltic Energy PLC’s (LON:DELT) Southern North Sea exploration projects, partnered with Shell, have be estimated by stockbroker Allenby to be worth around £146mln, a valuation that dwarfs the AIM-quoted firm’s current market capitalisation of just £12.65mln.
Allenby, house broker to Deltic, has run the ruler over the North Sea assets after the company recently shunted away unwanted takeover interest from Reabold Resources, and following project updates this week.
Most recently, on Thursday, Deltic told investors that Shell had provided new processed 3D seismic data over the Pensacola prospect, which is slated for a possible well in the second half of next year.
The data delivered a robust image over the Pensacola prospect, Deltic noted, and the partners will now update their interpretation of the prospect.
On Tuesday, meanwhile, Deltic announced a material upgrade to gas estimates for the Selene prospect. Here, a well investment decision will take place ahead of a pencilled in drill programme for 2022.
Notably, the estimated chance of success at Selene was lifted significantly to stand at 70%, up from 39% in the previous estimate. The new resource estimate sees some 629bn cubic feet of in-place P50 gas resources, with a range set at 286bn in the P90 (the highest confidence) estimate and 1.02 trillion cubic feet in the P10 (most prospective) estimate.
Deltic noted that the upgrade is the result of a considerable amount of work including the reprocessing of existing 3D seismic data and the use of an innovative technological approach to depth conversion by a Shell and Deltic joint team.
Allenby analyst Peter Dupont highlighted that the Selene update points decidedly towards commerciality and noted that the chance-of-success is very high for a pre-drill estimate.
Dupont, in a note, said: “It should also be remembered that in terms of commercialisation Selene lies close to infrastructure owned by its JV partner, Shell.”
He added: “Our risked absolute valuation rises from £116mln to £146mln while the success case valuation for Pensacola, Selene and Dewar increases from £234mln to £276mln.
“On a per share basis our valuation estimates are 10.4p (8.3p previously) and 19.6p (16.7p previously) on a risked and a Pensacola, Selene and Dewar success case respectively.”
Deltic, formerly Cluff Natural Resources, was relaunched with its new name on June 25.