Deltic Energy PLC (AIM:DELT) has completed the farm-out of stakes in a group of five Southern North Sea licences to Cairn Energy PLC (LSE:CNE).
Cairn now formally acquired 60% interests in reach of the licences and becomes project operator.
The new partner is committed to cover 100% of the costs of agreed work programmes for each licence up until they are brought to a drill-or-drop decision, thereafter it is agreed that Cairn will fund 70% of the first well across the licences (up to a cap of US$25mln for gross well costs).
"Completion of this transformational multi-licence farm out marks the formal commencement of our partnership with Cairn which will see significant investment being made in Deltic's strategic Southern North Sea gas exploration portfolio,” said Deltic chief executive Graham Swindells.
“Ahead of completion of the transaction we have already begun working with Cairn to progress activities on the licences. I am particularly pleased that the new 3D seismic survey has commenced so quickly after announcement of the farm out, demonstrating a shared commitment to immediately accelerate the development of these licences and hence timeline to potential drilling.”
Swindells added: “We look forward to building our partnership with Cairn, as we continue to develop our conveyor belt of Southern North Sea gas prospects towards drilling."
Cairn paid Deltic US$1mln for historic back costs.
The AIM-quoted explorer will retain 40% of the licences.