UK AIM-listed explorer Deltic Energy has completed its farm-out agreement with Cairn Energy, it announced November 8, following regulatory approval from the Oil & Gas Authority. The deal comprises five Southern North Sea licences.
Following payment of $1 million in respect of Deltic’s historic costs, Cairn now holds a 60% interest in each of licences P2428 (Cupertino Area) and P2567 (Cadence) and 70% in licences P2560, P2561 and P2562 which are between the Breagh and Tolmount gas fields. Cairn is the operator and Deltic is the only other shareholder in each case. Cairn is also to fund 100% of an agreed work programme for each of the five licences up to the point of making a drill or drop decision on each licence.
Following a drilling decision being made on either of P2428 and P2567, Cairn will fund 70% of the costs of whichever well is drilled first, subject to a gross well cost cap of $25 million.
ION Geophysical is already acquiring some 700km2 of seismic data, which is focussed on the Plymouth Zechstein Reef Prospect and will de-risk future drilling. The survey is expected to be completed before the end of November with processed data to be delivered in the second quarter of 2022.
Deltic CEO Graham Swindells said he was pleased that the new 3D seismic survey began so soon after announcement of the farm out, “demonstrating a shared commitment to immediately accelerate the development of these licences and hence timeline to potential drilling.” Deltic has also farmed out SNS licences to the Anglo-Dutch major, Shell.
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