Deltic Energy plc said its partner and operator Shell UK Ltd had recommended entering the second term of licence P2437, containing the Selene gas discovery.
FID
Along with Dana Petroleum (E&P) Ltd, the joint venture will agree a low-cost work programme and timeline with the North Sea Transition Authority before a potential final investment decision.
With no further drilling needed, post-well analysis and environmental studies will begin to secure regulatory approvals.
The company confirmed a gas discovery at the start of November at the UK southern North Sea field from where the Valaris 123 drilling rig demobilised on 10 November.
The well cost estimate is US$48 million which is within the $49m carry cap in accordance with Deltic’s farm-out agreement to the 2024 Selene drilling and testing costs.
Shell has yet to receive final invoices from service providers.
As at 31 October 2024, Deltic had an unaudited cash balance of £1.9m.
Deltic’s completed preliminary reservoir modelling indicated that two horizontal wells would be sufficient “to drain the majority of the Selene structure”.
A minimum facilities installation on Selene will be tied back to the Barque field infrastructure via a 20km subsea pipeline, although Shell has the final say on the field’s development.
Chief executive Andrew Nunn added that the agreement on the second term reflected the high quality and low cost of the development and its economic potential.
“This decision to move into the second term of the licence kicks off an incredibly busy period, as we support the operator through the various engineering, environmental and regulatory workstreams that need to be pulled together to support a potential final investment decision.
“The workstreams now in train are an important signal to our investors as you wouldn’t commence this process if you didn’t believe there was a material commercial return at the end it.”