Deltic Energy PLC Pensacola Resource Estimate Significant Increase (6981F)

TIDMDELT

RNS Number : 6981F

Deltic Energy PLC

12 July 2023

12 July 2023

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 which forms part of domestic UK law pursuant to the European Union (Withdrawal) Act 2018 ("UK MAR"). With the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

Deltic Energy Plc ("Deltic" or "the Company")

Significant increase in Pensacola Resource Estimate

Deltic Energy Plc today announces a significant increase in its estimate of oil and gas resources for the Pensacola discovery on Licence P2252 (Deltic WI: 30%). This increase, based on Deltic's post well analysis, is nearly double initial expectations.

Highlights

-- Following post well analysis, Deltic now estimates the Pensacola structure to contain gross P50 initially in place volumes of gas and oil of 342 million barrels of oil equivalent.

-- This analysis indicates Pensacola may contain almost double the volume of recoverable gas and oil than originally thought, with Deltic now estimating total gross P50 Estimated Ultimate Recovery ('EUR') of c.99mmboe, up from 50mmboe immediately after well completion.

-- Significantly, Deltic now estimates Pensacola contains material volumes of oil, representing c. 30% of the combined recoverable hydrocarbons.

-- Work is progressing with partners to develop the appraisal and development programme for Pensacola with an appraisal well continued to be targeted for late 2024.

   --    Deltic is pursuing monetisation options for the discovery in line with its strategy. 

Graham Swindells, Chief Executive of Deltic Energy, commented:

"The Pensacola oil and gas discovery is transformational for Deltic. Well data indicates that Pensacola contains close to double our original estimate, representing one of the most significant discoveries in the North Sea in many years."

"This is an outstanding result for Deltic. Our success to date reinforces the quality of our technical team and the Deltic model of taking licences from award through to successful drilling."

"We look forward to working with our JV partners to continue moving this exciting asset through the appraisal phase and onward towards development. With the significant additions to our resource base, we will also continue to pursue monetisation options in line with our stated strategy."

Volumetric Update - Oil and Gas Initially in Place

Deltic has updated its volumetric assessment of the Pensacola discovery based on data collected from the 41/05a-2 well and the results of lab testing. This represents a significant increase in estimated initially in-place gas and oil volumes, as set out below:

 
 PENSACOLA DISCOVERY - Oil and Gas Initially in Place 
  (gross, Deltic WI: 30%) 
     Hydrocarbon            Units         P90      P50     P10 
         Type 
                       ---------------  -------  ------  ------ 
         Gas                 BCF          312      459     652 
                       ---------------  -------  ------  ------ 
         Oil                 MMBO          87      243     485 
                       ---------------  -------  ------  ------ 
      Associated 
         Gas*                BCF           40      136     340 
                       ---------------  -------  ------  ------ 
       COMBINED 
         TOTAL             MMBOE**        148      342     650 
                       ---------------  -------  ------  ------ 
 

*Associated gas is gas dissolved within the oil deposit

** Gas is converted at 5.98 BCF to 1 MMBOE

Licence P2252 which contains the Pensacola discovery is operated by Shell

While the expected presence of oil in the south of the prospect represents highly material upside, the discovered gas volumes in the northern part of the Pensacola prospect are better constrained and therefore the gas is still likely to be the initial focus of near-term appraisal and development activity.

Preliminary Development Plan and Recoverable Oil and Gas Volumes

Based on preliminary reservoir engineering work completed by Deltic, a range of potential development scenarios have been assessed to allow an estimation of recoverable volumes which could be produced from the Pensacola discovery. In all of these scenarios it has been assumed that hydrocarbons will be exported via a new offshore installation and pipeline to Teesside. Based on these scenarios Deltic estimates the range of potentially recoverable oil and gas associated with the Pensacola discovery as follows:

 
 PENSACOLA DISCOVERY - EUR (gross, Deltic 
  WI: 30%) 
   Hydrocarbon        Units      P90    P50    P10 
       Type 
                   -----------  -----  -----  ----- 
       Gas             BCF       198    320    499 
                   -----------  -----  -----  ----- 
       Oil             MMBO       11     30     67 
                   -----------  -----  -----  ----- 
    Associated 
        gas            BCF        24     95    272 
                   -----------  -----  -----  ----- 
     COMBINED 
       TOTAL          MMBOE*      48     99    196 
                   -----------  -----  -----  ----- 
 

* Gas is converted at 5.98 BCF to 1 MMBOE

Licence P2252 which contains the Pensacola discovery is operated by Shell

Post Well Analysis

Interpretation work by the JV team following the post-well analytical programme has reinforced the conclusion that thicker and better quality Hauptdolomite reservoir is present across the crest of the Pensacola Reef, which will be targeted in future appraisal and development drilling.

The Hauptdolomite cores collected at the well location have an average porosity of 18.8% with a maximum permeability of 40mD (average of 6mD), better than the reservoir quality initially estimated from wireline logs. Dynamic reservoir modelling by Deltic indicates that the reservoir quality encountered at the well location would support commercial flow rates from horizontal wells, without requiring any improvement in reservoir quality up-dip.

Next Steps

Deltic continues to work closely with the Licence Operator and our JV partners to develop the appraisal programme for the Pensacola discovery. Subject to JV and other regulatory approvals, the drilling of an appraisal well on Pensacola is continued to be targeted for late 2024. In parallel, the JV will undertake various studies to define optimal development plans for the Pensacola discovery.

In line with the Company's stated strategy, Deltic has also commenced a formal process to pursue the value crystallisation options that exist for the Pensacola discovery which may involve monetisation and/or farm down of its equity interest in the Pensacola discovery.

Qualified Person's Statement:

Andrew Nunn, a Chartered Geologist and Chief Operating Officer of Deltic, is a "Qualified Person" in accordance with the AIM Guidance Note for Mining, Oil and Gas Companies, June 2009 as updated 21 July 2019, of the London Stock Exchange. Andrew has reviewed and approved the information contained within this announcement.

Standard

Estimates of resources have been prepared in accordance with the PRMS as the standard for classification and reporting.

Glossary of Technical Terms

 
 Associated Gas:               Associated Gas is a natural 
                                gas found in contact with or 
                                dissolved in crude oil in the 
                                reservoir 
 BCF:                          Billion Cubic Feet 
                              --------------------------------------- 
 Estimated Ultimate Recovery   Estimated Ultimate Recovery 
  or EUR:                       is defined as those quantities 
                                of petroleum which are estimated, 
                                on a given date, to be potentially 
                                recoverable from an accumulation, 
                                plus those quantities already 
                                produced therefrom 
                              --------------------------------------- 
 Gas Initially in Place:       The quantity of gas that is 
                                estimated to exist originally 
                                in naturally occurring accumulations 
                                before any extraction or production 
                              --------------------------------------- 
 m D:                          A millidarcy ( mD ) is one thousandth 
                                of a darcy a nd a standard unit 
                                of measure of permeability 
                              --------------------------------------- 
 MMBO:                         Million Barrels of Oil 
                              --------------------------------------- 
 MMBOE or million barrels of   million barrels of oil equivalent. 
  oil equivalent:               Gas is converted at 5.98 BCF 
                                to 1 MMBOE 
                              --------------------------------------- 
 Oil Initially in Place:       The quantity of oil that is 
                                estimated to exist originally 
                                in naturally occurring accumulations 
                                before any extraction or production 
                              --------------------------------------- 
 P90 resource:                 reflects a volume estimate that, 
                                assuming the accumulation is 
                                developed, there is a 90% probability 
                                that the quantities actually 
                                recovered will equal or exceed 
                                the estimate. This is therefore 
                                a low estimate of resource 
                              --------------------------------------- 

 P50 resource:                 reflects a volume estimate that, 
                                assuming the accumulation is 
                                developed, there is a 50% probability 
                                that the quantities actually 
                                recovered will equal or exceed 
                                the estimate. This is therefore 
                                a median or best case estimate 
                                of resource 
                              --------------------------------------- 
 P10 resource:                 Reflects a volume estimate that, 
                                assuming the accumulation is 
                                developed, there is a 10% probability 
                                that the quantities actually 
                                recovered will equal or exceed 
                                the estimate. This is therefore 
                                a high estimate of resource 
                              --------------------------------------- 
 PRMS:                         the June 2018 Society of Petroleum 
                                Engineers ("SPE") Petroleum 
                                Resources Management System 
                              --------------------------------------- 
 WI:                           Working Interest 
                              --------------------------------------- 
 

**ENDS**

For further information please contact the following:

 
 Deltic Energy Plc                                 Tel: [phone] 
                                                    2630 
 Graham Swindells / Andrew Nunn / Sarah McLeod 
 
   Allenby Capital Limited (Nominated Adviser)        Tel: [phone] 
                                                      5656 
 David Hart / Alex Brearley (Corporate Finance) 
 
   Stifel Nicolaus Europe Limited (Joint Broker)      Tel: [phone] 
                                                      7600 
 Callum Stewart / Simon Mensley / Ashton 
  Clanfield 
 
   Canaccord Genuity Limited (Joint Broker)           Tel: [phone] 
   Adam James / Gordon Hamilton                       8000 
 Vigo Consulting (IR Adviser)                      Tel: [phone] 
                                                    0230 
 Patrick d'Ancona / Finlay Thomson / Kendall 
  Hill 
 

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July 12, 2023 02:00 ET (06:00 GMT)