Deltic Energy says Ukraine invasion has changed North Sea gas outlook for 'foreseeable future'

Deltic Energy PLC said partner Shell PLC has indicated that the Pensacola well in the North Sea will be drilled towards the end of the third quarter of this year.

Analysis of site survey data has identified hard seabed conditions at the well location, which will influence Shell's rig selection and contracting process, the junior added.

Pensacola is a Zechstein reef prospect located to the northwest of the Breagh gas field in the Southern North Sea.

From other locations, Zechstein has been supplying gas from Poland to The Netherlands for years.

Deltic’s estimates for Pensacola put the prospect’s gross P50 prospective resources at around 309bn cubic feet of gas, which would make it one of the highest impact gas exploration targets in recent years.

Mark Lappin, chairman, said that Russia’s invasion of Ukraine had changed Europe's position on Russian gas “for the foreseeable future”, which bodes well for the company's prospects.

“We currently have acreage at each stage along our conveyor belt up to drilling and are preparing to drill our first exploration well at Pensacola with operator Shell within the coming months.

“Acreage farmed out to Shell and Capricorn Energy PLC (previously Cairn Energy PLC) is moving forward along this process to a similar conclusion and other acreage is being worked towards farm-out.”

Deltic farmed out 60% stakes in five licences in the Southern North Sea to Capricorn, which will be the operator and pay for all of the initial exploration costs.

Losses in the year to the end of December 2021 were £1.94mln, with net cash at the year-end of £10.1mln.

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