UK North Sea-focused oil and gas company Orcadian said Wednesday that the North Sea Transition Authority (NSTA) had confirmed to the company that it was prepared to agree to an extension to the second term of the offshore license containing the undeveloped Pilot oil field, subject to certain conditions.
The extension would change the expiration date of the second term of the offshore license P2244 from November 30, 2023, to November 30, 2025.
Orcadian said in September it had entered into a non-binding heads of agreement with an unnamed North Sea operator, which provided a period of exclusivity to undertake due diligence on P2244, and execute definitive documentation for a farmout, by November 30, 2023.
The work program included in the P2244 extension request, submitted by Orcadian, was prepared jointly with the proposed operator, and the preparation of documentation is proceeding as plan.
The extension is conditional on Orcadian's submission, before November 30, 2023, of an application for NSTA consent to: assignment of an interest in P2244 to the Proposed Operator; and appointment of the Proposed Operator as operator of P2244.
If NSTA consents are granted, the assignment of the interest in P2244 to the Proposed Operator must be completed by March 31, 2024.
"At this stage, there can be no guarantee that the final agreements will be entered into, or that the farm out will complete but the Directors are progressing on the basis that the agreements will be concluded and that the necessary consents will be forthcoming. Completion of the transaction would be subject to shareholder approval, pursuant to Rule 15 of the AIM Rules for Companies, and the consent of Shell and TGS to the assignment," Orcadian said.
Should the listed conditions not be met, then P2244 would automatically cease 30 days thereafter.
Steve Brown, Orcadian's CEO, said:"We are delighted that the NSTA provided such a prompt response to our licence extension request, and we are working diligently on the necessary documentation so that we can progress this deal as quickly as possible."
The Pilot field is Orcadian's core asset and securing a partner to farm-in to the project and finance the development of the Pilot discovery has been the company's key focus since its foundation. Pilot was discovered by Fina Petroleum in 1989.
The development plan under discussion with the potential operator is designed to accelerate first oil and to minimize the initial cost of the development, Orcadian said in September.
Orcadian’s previously proposed field development concept for the Pilot field was based upon a Floating Production Storage and Offloading vessel (FPSO), with over thirty wells to be drilled by a jack-up rig through a pair of wellhead platforms, and the provision of power from a floating wind turbine.
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