Orcadian Energy plc has signed a non-binding heads of agreement for a farm-in on its southern North Sea licence containing the Earlham discovery.
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The deal also covers a potential redevelopment project to blow down the decommissioned Orwell gas field.
The licence holds Earlham with a P50 contingent resource of 114 bcf sales gas, the Clover prospect with a P50 prospective resource of 153 bcf gas, while Orwell could deliver more than 30 bcf gas.
Orcadian said that the potential partner would acquire an interest in all, or part of, the licence while it remained operator until completed assessment of the Earlham project.
The partner will then become operator and prepare the field development plan and deliver the project.
On completion of the transaction the partner will pay Orcadian a fee and fund all Earlham and Orwell development costs, work programme and other licence costs until first gas production.
The potential partner will have commercial exclusivity until the end of 2024 for both parties to complete definitive documentation for the deal.
Orcadian will also receive a proposed $1.4m loan, for up to two years, from an affiliate of the partner, to repay the outstanding loan to Shell, certain corporate liabilities and for general and administrative costs.
The loan will be settled from the completion payment due under the proposed farm-in arrangement.
Ocadian added it aimed to complete the loan documentation so that drawdown could occur before 13 June.
Both parties have also delineated further opportunities to work together to generate low carbon electricity.
“We have been approached by a partner that shares our vision of developing Earlham,” said chief executive Steve Brown.
“We have been very impressed with the maturity of our potential partner’s concept and are keen to explore this and other opportunities to work with them.”