Following announcement of the farm-out Agreement on 12 August 2021, Deltic and Cairn have received the necessary regulatory approvals from the Oil & Gas Authority and have entered into joint operating agreements for each of the five licences.
Under the terms of the agreement:
- Cairn has paid Deltic consideration of US$1 million by way of contribution towards historic back costs.
- Cairn now holds a 60% interest in each of Licences P2428 (Cupertino Area) and P2567 (Cadence) and a 70% interest in each of Licences P2560, P2561 and P2562 which are located between the Breagh and Tolmount Gas Fields.
- Deltic therefore now has a 40% interest in licences P2428 and P2567 and a 30% interest in licences P2560, P2561 and P2562.
- Cairn is funding 100% of an agreed work programme for each of the five licences up to the point of making a drill or drop decision on each licence.
- Following a drilling decision being made on either of P2428 and P2567, Cairn will fund 70% of the costs of whichever well is drilled first, subject to a gross well cost cap of US$25 million.
- Cairn will now become Operator of each of the five licences.
Since announcement of the farm-out, the shooting of 3D seismic data over Licence P2428 and surrounding areas, a key component of the work programme, has commenced. ION Geophysical are currently in the process of acquiring approximately 700 km2 of seismic data, which is focussed on the Plymouth Zechstein Reef Prospect and will de-risk future drilling. The survey is expected to be completed before the end of November with processed data due to be delivered in 2Q2.
Graham Swindells, Chief Executive of Deltic Energy, commented: "Completion of this transformational multi-licence farm out marks the formal commencement of our partnership with Cairn which will see significant investment being made in Deltic's strategic Southern North Sea gas exploration portfolio. Ahead of completion of the transaction we have already begun working with Cairn to progress activities on the licences. I am particularly pleased that the new 3D seismic survey has commenced so quickly after announcement of the farm out, demonstrating a shared commitment to immediately accelerate the development of these licences and hence timeline to potential drilling.We look forward to building our partnership with Cairn, as we continue to develop our conveyor belt of Southern North Sea gas prospects towards drilling."
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Read the article online at: https://www.oilfieldtechnology.com/offshore-and-subsea/08112021/deltic-energy-completes-farm-out-of-southern-north-sea-gas-licences-to-cairn-energy/