LONDON (ShareCast) - (Sharecast News) - Deltic Energy said on Monday that itself and its joint venture partner on licence P2252, Shell UK, had made a positive well investment decision to drill the high-impact Pensacola Prospect on the licence in the UK Southern North Sea.
The AIM-traded firm said the two companies had confirmed to the Oil and Gas Authority (OGA) that the contingent well commitment was now firm.

It said the drilling of the well on Pensacola had the potential to be "transformational" for Deltic, describing it as a "vital step" in evaluating the highly-prospective Zechstein reef play, which in turn had the potential to revitalise exploration in the Southern North Sea.

Following re-interpretation of the new 3D seismic data acquired over the prospect, Deltic estimated that Pensacola contained gross P50 prospective resources of 309 billion cubic feet of gas, with a P90-P10 range of 39 billion 1.18 trillion cubic feet, which would rank the prospect as one of the highest-impact exploration targets to be drilled in the gas basin in recent years.

It noted that the joint venture's new interpretation of the 3D seismic data also resulted in a "much-improved" view of the prospect's geological chance of success, which had increased to 55% from 20%.

The company said the well was expected to be drilled in May 2022, which would allow the joint venture to take advantage of a drilling unit that would be contracted by Shell as part of a multi-well drilling campaign, which in turn would bring "advantageous" day rates and operational efficiencies.

Deltic remained fully-funded for its 30% working interest in the well.

"Confirmation of this well investment decision represents the achievement of another key milestone as we continue to execute our exploration-led strategy in the Southern North Sea with our world class partner, Shell," said chief executive officer Graham Swindells.

"The rigorous re-evaluation of the Pensacola Prospect has validated and reinforced the fantastic work of our technical team and their initial view that the Pensacola prospect, and the Zechstein play as a whole, represented a significant missed opportunity in the Southern North Sea.

"Well planning is already underway, and we look forward to providing regular updates as we progress through the planning phase towards the commencement of operations, in addition to continuing to mature our other prospects, including Selene, towards drilling."

At 1542 GMT, shares in Deltic Energy were up 5.84% at 1.77p.

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