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Deltic Energy says recent acreage expansion marks “another major milestone”

A broader portfolio highlighted that the Cadence prospect, estimated at nearly 600mln barrels, could potentially be 'fast-tracked' to drilling - subject to a farm-out

Deltic Energy PLC - Deltic Energy says recent acreage expansion marks “another major milestone”

Deltic Energy PLC (LON:DELT) has told investors that its recent portfolio expansion, via the UK’s offshore licensing round, was “another major milestone” for the exploration company.

The license awards, earlier this month, almost doubled Deltic’s footprint with the addition of six licences.

Most of the new acreage is in the south North Sea region, where Deltic added four licences to now hold a total of ten licences.

This core area for Deltic now comprises over 2,733 square kilometres of contiguous licences, spanning from the exploration close to the Breagh gas field out to the Cupertino area near the Cygnus gas field.

Significantly, Deltic noted that it presently retains 100% of the project interest in these assets and as such has maximum flexibility as it seeks farm-down partnership opportunities.

The area includes the 43/11 and 43/12b blocks, within which Deltic identifies the Cadence prospect – part of the prior SNS portfolio - as a highlight, as it is said to be highly analogous to Spirit Energy’s Andromeda North discovery, unearthed immediately to the south in 2019.

Deltic pointed to the potential to fast-track Cadence towards drilling, subject to a farm-out to a partner. Cadence was estimated, in 2016, to host some 597mln barrels of resource potential across two reservoir targets. The other previously identified prospects in this region include Cordova, Bathurst, and Bassett.

The new acreage includes underexplored areas to the south of the Breagh gas field and Deltic’s Cortez exploration prospect.

It is described as a proven gas-bearing area with a limited number of well penetrations. There is some 2D and 3D seismic data though it is said to be of varying vintage and quality. Deltic noted that the data will respond well to modern reprocessing.

“The award of the highly prospective and sought after 43/11 and 43/12b blocks alone significantly increases the company's resource base and, when combined with other new and existing licences, creates a strategically important contiguous expanse of Deltic held licences,” Graham Swindells, Deltic chief executive said in a statement.

“We look forward to continuing to work on our enhanced portfolio of licences as well as progressing our Pensacola and Selene licences with Shell."

Deltic noted that it remains on-track to finalise technical work for the Cupertino prospect in the coming months, and, it expects to launch a formal farm-out process before the end of 2020. It pointed out that reprocessed 2D seismic data is due in mid-October.

Along with the 100% held SNS licences packages, the company’s joint venture with Shell also landed extra acreage in the licensing round. This represented a potential extension area for the Pensacola prospect, plus some potential satellite reservoirs. Deltic retains a 30% interest in the venture.

Quick facts: Deltic Energy PLC

Price: 1.675 GBX

Market: AIM
Market Cap: £23.55 m

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