Deltic Energy signs deal with Cairn to farm out North Sea gas assets

Deltic Energy PLC on Thursday said it has farmed out five gas licences to Cairn Energy PLC.

Deltic is a London-based oil and gas explorer with assets in the UK North Sea. Edinburgh-based Cairn is a multinational explorer and developer listed in the FTSE 250 index.

Cairn will buy a 60% interest in each of two licences, and 70% each for the other three licenses. As part of the deal, Cairn will fund 100% of an agreed work programme and operate each licence, up to the point of deciding whether to drill, or give up, the assets.

In return, Cairn will pay Deltic USD1 million up-front, and fund 70% of the costs for either of two of the licences – up to a maximum USD25 million – if they decide to drill.

in Deltic were up 6.6% to 2.13 pence in London on Thursday morning. Cairn was up 2.0% to 181.40 pence.

The farm-out deal is conditional on the two companies entering a joint operating agreement and getting regulatory approval.

“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,” Deltic Chief Executive Graham Swindells said.

Published: 12-08-2021