Deltic Energy firmly focused on North Sea opportunities
- Deltic Energy and Shell complete well site survey in North Sea
- Deltic Energy tipped to rise 57% as Shell greenlights Pensacola well
- Deltic Energy present details of farm-out deal with Cairn Energy PLC and how it benefits the firm
Quick facts: Deltic Energy PLC
Price: 2.0698 GBX
Market Cap: £29.1 m
About the company
Deltic Energy PLC is a London based oil and gas exploration business investing in the UK’s proven hydrocarbon provinces.
The company currently holds significant equity positions in a number of highly prospective licences in the Southern and Central North Sea.
How it is doing
Deltic Energy PLC (AIM:DELT, FRA:7RC) told investors that its partner, Royal Dutch Shell (NYSE:RDS.A) PLC, has completed a geophysical site survey over the planned Pensacola exploration well location in the Southern North Sea.
The survey was completed on time and without incident, it noted.
The programme’s findings will be interpreted and, if needed, a second geotechnical phase will take place before the end of the year, including the collection of samples from the seabed.
"The completion of the site survey on Pensacola is a key part of the well planning process and represents another important milestone as the Deltic-Shell JV continues the preparatory works in advance of drilling,” said chief executive Graham Swindells.
The comments, in Tuesday’s interim results statement, come as the company looks forward to the drilling of the Shell operated Pensacola exploration well and as a recently agreed joint venture with Cairn Energy is advancing exploration activities.
ION Geophysical, the contractor for the programme, has now mobilised its vessel to the site and it expects to start the survey on Saturday. The programme is expected to run for six to seven weeks, with processed data due by mid-2022.
What the brokers say
The stockbroker repeated a ‘buy’ recommendation and hiked its target price to 2.7p (from 2.2p) suggesting some 57% upside to the current market price of 1.76p per share.
“Confirmation of a positive well investment decision from Shell to test the Pensacola prospect is a very welcome outcome and is the next important step in Deltic's evolution,” analyst Chris McMahon said in a note.
What management says
Graham Swindells, CEO of Deltic Energy PLC (AIM:DELT) (LON:CLNR) explains to Proactive London how the company will benefit from a farm-out deal with Cairn Energy PLC (LSE:CNE) (LSE:CNE) (LSE:CNE) for five licences in the Southern North Sea.
Cairn will acquire between 60% and 70% of the licences and it will cover 100% of the agreed work programmes for each of the five licences. If the exploration assets advance to drilling, Cairn will cover 70% of the costs of the first well up to a maximum US$25mln.
Deltic will receive US$1mln upfront, representing a contribution towards historic back costs.
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