Drilling of UK’s first Shell-led 2024 offshore exploration well on track for July commencement
(WO) – In a portfolio update, UK Norh Sea operator Deltic Energy reported “very good” progress on the Selene exploration well, which remains on track to commence drilling operations in the first half of July 2024, with operations expected to last approximately 90 days.
Following a farm-out to Dana Petroleum earlier this year, Deltic retains a 25% working interest in the license and has no cost exposure to the imminent well up to a gross success case well cost of $49M. According to Deltic, the successful farm-out of the Selene project “demonstrates that significant appetite remains for certain types of exploration assets within the SNS.”
The 318 Bcf (Gross P50 Prospective Resources) Selene prospect is a simple Leman Sandstone structure in an established, well understood play close to existing production infrastructure.
Deltic considers it “unlikely” that Selene will require further appraisal prior to field development planning commencing and could be brought into production “relatively quickly” following discovery given the proximity of existing infrastructure.
Additionally, Deltic announced its withdrawal from License P2252 in the UKCS, which contains the Pensacola discovery. Deltic cited “deteriorating sentiment towards the oil and gas industry as a result of ongoing fiscal volatility and negative political rhetoric in the run-up to the July election” as reasons for its exit.
Graham Swindells, Chief Executive of Deltic Energy, said, "Recent history in relation to large scale discoveries such as Cambo and Rosebank has demonstrated the difficulties associated with progressing major offshore developments on the UKCS as damaging political rhetoric and fiscal instability continue to undermine the sector. Although we have been unable to secure Deltic's future involvement in the Pensacola project, it does not detract from the achievements of the team in identifying the opportunity, attracting a partner like Shell and raising the necessary capital to drill the initial discovery well.
“Despite our disappointment at not remaining involved in Pensacola, the technical and commercial skills and experience demonstrated on the asset will be critical as we now focus on the Selene opportunity and similar infrastructure-led projects such as Syros and Blackadder. We believe these can be brought onstream more quickly, help maintain the viability of existing infrastructure and defer decommissioning of key production hubs which continue to generate interest despite the general malaise affecting the UK E&P industry.
“While the current situation is clearly disappointing, this is where the diversity and quality of the Deltic asset base demonstrates its value, and we will be working tirelessly on behalf of our shareholders to ensure that we capitalize on those foundations starting with the imminent drilling operations on the Selene gas prospect. This, on its own, we estimate to be worth multiples of the company's current market value and can play an important role in the maintenance of the UK's security of domestic energy supply when it has never been more important."
Lead image: Valaris 123 jack-up rig (Source: MarineTraffic.com/Photographer: Jan Henry Knutsen)
