Shell, the operator of Pensacola discovery in the North Sea, has granted short period of additional time to partner Deltic Energy to secure funding associated with its share of costs for an appraisal well.
In its capacity as Licence Operator of P2252, Shell set a deadline for Deltic Energy for June 12, 2024 to find appropriate funding option that will mitigate its share of costs for Pensacola appraisal well.
Deltic Energy said this will allow it to progress discussions with potential counterparties in relation to a possible transaction. However, the company added there is no guarantee that discussions will be concluded successfully within that timeframe and, in such circumstances, it will be required to withdraw from the Pensacola licence and transfer its interest to the joint venture partners.
In an earlier update, dated April 30, 2024, Deltic Energy. said that the continual tinkering with the Energy Profits Levy and resultant fiscal uncertainty created by the current government, along with recent rhetoric emanating from the Labour Party, which had a severely negative effect on the ability of UK Exploration and Production (E&P) companies to commit to long term investments in the North Sea.
Deltic’s 30% share of the Pensacola well is estimated to be roughly $19.7 million (£15 million), according to Deltic Energy.
“Alongside its ongoing farm out process, Deltic will continue to consider alternative sources of capital and non-traditional funding structures to mitigate costs and/or secure its equity position in the Pensacola well. However, there is no guarantee that such capital will be available or available on acceptable terms,” the company said on April 30, 2024.
Shell struck gas at the Pensacola prospect in January 2023, using the Noble Resilient jack-up drilling rig.
In February 2024, Shell signed a contract with Valaris for its Valaris 123 heavy-duty jack-up rig, that will be used for the drilling of both the Selene exploration well and the Pensacola appraisal well in the North Sea.