Deltic Energy PLC (AIM:DELT) (AIM:DELT) has struck a farm-out deal with Cairn Energy PLC (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.
"This agreement represents the commencement of a wide-ranging partnership with Cairn, whose successful history of opening up new basins is aligned with our exploration-focused strategy,” said chief executive Graham Swindells.
“The partnership will result in a significant investment across multiple licences within Deltic's strategic Southern North Sea gas exploration portfolio, as we jointly progress the next high impact drilling targets.”
Swindells added: “We are particularly excited at the prospect of building our partnership with Cairn, a well-funded and highly experienced North Sea operator. Both parties share a commitment to pursuing high impact exploration opportunities in the Southern North Sea and successfully developing these gas prospects."