Deltic Energy PLC (AIM:DELT) says two North Sea gas wells scheduled for drilling will be ‘enormously valuable’ if successful given the supply security issues sparked by Russia’s invasion of Ukraine.
October will see work begin on Pensacola with operator Shell, which holds a 70% working interest, targeting a 309bn cubic feet (BCF) resource, readers learned from the company's interim results statement.
Deltic recently committed to tapping the potential of the Selene prospect, which is estimated to host 318BCF of gas.
It described both wells as potentially company-making making.
Chief executive Graham Swindells said: “As we stand on the verge of drilling our first well on Pensacola with our partner Shell, and with Selene now to follow, we are further demonstrating the success of our business model which is focussed on the identification of early-stage opportunities and taking them from licensing through to drilling whilst introducing partners of the highest calibre."
In the update, investors were told the Deltic-Capricorn joint-venture was making significant progress across five Southern North Sea licences.
At the same time, the company’s technical team has successfully completed the initial phase of geological work on the Syros prospect in the Central North Sea, and a farm-out process has now begun.
As of June 30, the group had £7.6mln – meaning it is fully funded for the Pensacola well.
The cash outflow for the first half was just under £2.5mln, while the loss was a tad over £1mln.
The shares, up 29% in the last month, succumbed to a bout of profit-taking as they nudged 6% in the wake of the first half numbers.
City firm SP Angel provided a ringing endorsement of Deltic and its prospects.
“Activity in the first half of the year has confirmed Deltic’s ability to identify early-stage opportunities and take them from licensing through to drilling whilst introducing high-quality partners,” it said.
“Investors can now look forward to exposure to drilling of the fully funded high impact Pensacola exploration well in the fourth quarter.”
---Updates with share price and broker comment---