Deltic Energy has entered into an agreement with Dana Petroleum for the farm-out of its 25% interest in Shell-operated license containing the Selene Prospect in the North Sea.
The transaction, in combination with the existing Shell UK carry, results in Deltic retaining a 25% non-operated interest in Licence P2437 and having no exposure to 2024 drilling and testing costs up to a cap in excess of current success case well cost estimates provided by the operator.
Deltic said it will transfer 25% equity in the license to Dana in return for $500,000 in cash on completion in relation to back costs incurred by Deltic.
Also, Dana is to carry Deltic for its residual cost exposure to the Selene well (after utilization of the existing carry from the Shell farm-out) to a value of $5 million, and $6 million in a success case
According to Dletic, Dana will pay its 25% share of costs from January 1, 2024.
Any gross well costs incurred in excess of $40 million (dryhole) or $49 million (success case) and any non-well related costs incurred after the effective date of January 1, 2024 will be split along equity lines.
The recent estimate of well costs from the license operator Shell indicate a total success case cost of the Selene well at $47 million.
Completion of the farm-out is conditional on obtaining consent from Shell and standard regulatory consents from the North Sea Transition Authority.
Preparatory works for the Selene well continue to progress on time and according to plan, according to the companies.
Geophysical and geotechnical site surveys have been completed and critical long lead items including casing have been ordered.
Procurement processes are also well advanced with the rig contract for the Valaris 123 having been announced on February 5, 2024, meaning that the Selene well remains on track to be drilled in third quarter of 2024.
"We are delighted to have strengthened the P2437 JV with the addition of an established operator like Dana who have a long history of successful exploration and development in the Southern North Sea.
"As a result of the transaction Deltic retains a material stake in one of the highest impact UK exploration wells planned in 2024 while effectively eliminating our estimated cost exposure to the exploration well, which remains scheduled to commence in third quarter of 2024,” said Graham Swindells, Chief Executive of Deltic Energy.