Deltic Energy plc said it had during the first half of 2022 made considerable progress and is looking for additional partnerships for its Southern and Central North Sea portfolio.
FINANCES
The company added that its interim results for the six months to 30 June 2022 showed that its business model was a success.
Deltic recorded a fall in its cash position to £7.6 million (H1 2021: £11.1m ).
Expenditure on intangible assets, primarily related to Pensacola well costs totalled £1,257,542 during the period (H1 2021: £210,884). The company said it remained fully funded for the well.
Cash out flow for the period of £2,464,362 (H1 2021: £873,064).
Losses rose to £1,031,280 (H1 2021: £691,754) as operating losses also increased to £1,028,861 (H1 2021: £674,718) including operating activity cash expenditure of £1,155,363 (H1 2021: £607,626).
Deltic recorded non-cash share-based payment expense of £136,341 (H1 2021: £61,435) and a write-down on the Blackadder licence of £48,188 (H1 2021: £nil).
The company incurred other non-cash costs of £56,997 not directly attributed to existing licences (H1 2021: £62,585).
Trade and other payables of £162,516 (31 December 2021: £931,148) decreased by £768,632 relating to operating and investing activities.
OPERATIONS
The company’s partner Shell UK Ltd is due to begin drilling Pensacola in October, targeting an estimated 309 bcf (P50 prospective resources) of natural gas.
Deltic has also committed to a second “potentially company-making” exploration well with the Selene prospect which contains an estimated 318 bcf (P50 prospective resources) of natural gas.
The company added that its joint venture with Capricorn Energy was making “significant progress” across five Southern North Sea licences including taking delivery of new 3D seismic data across licence P2428.
Deltic successfully completed the initial phase of geological work on the Syros prospect in the Central North Sea, and has started a farm-out process.
The company also aims to strengthen further and diversify its portfolio as it prepares for the UK’s 33rd Offshore Licensing Round this autumn.
INCENTIVE
Chief executive Graham Swindells said that although the company would not have supported the Energy Profits Levy, or felt it made a great deal of sense economically, the tax had created a significant opportunity for Deltic.
“As an exploration company, Deltic is not subject to the levy, however, as a company that thrives on partnerships for drilling, the associated introduction of the investment allowance, which creates a 90% cost saving on new investment in the North Sea, means that the economics of Deltic’s projects are significantly enhanced such that active companies subject to the levy will have a greater incentive to invest in new projects and exploration, such as those within the Deltic portfolio.
“Accordingly, Deltic will seek to take advantage of this opportunity to create further partnerships, farm outs and to facilitate drilling activity.”