Deltic Energy Plc, the AIM-quoted natural resources investing company with a high impact exploration and appraisal portfolio focused on the Southern and Central North Sea, is pleased to announce its audited results for the year ended 31 December 2020 ('FY 2020').
· Completed rigorous technical programme on Pensacola (Licence P2252) resulting in the post period announcement that the Deltic-Shell JV will drill a well on the prospect in May 2022
· Ongoing technical work on Selene (Licence P2437) delivering resource update including increase in GIIP and significantly enhanced geological chance of success. Exploration well expected in 2022
· Significant progress on Cupertino Area (Licence P2428) following reprocessing of seismic data to deliver a material resource update with combined P50 prospective gas resource of close to 1 TCF (over 150mmboe). Farmout process underway with significant interest from potential partners
· Reprocessing of legacy seismic on Cortez prospects (Licence P2424) with Primary Cortez South prospect identified with estimated P50 prospective resources of over 300 BCF
· Award of six new licences in UK's 32nd Licensing Round including the previously held Cadence prospect (blocks 43/11 and 43/12)
· Further expansion of partnership with Shell with the award of an additional new joint licence to the north of Pensacola (blocks 41/5b and 42/1b)
· Net cash outflow from operations and investing activity for the year of £1.8 million (2019: £1.8 million)
· Cash position of £12.0 million at 31 December 2020 (2019: £13.8 million) with no debt. As at 31 March 2021, the Company had cash on hand (unaudited) of £11.52 million
Graham Swindells, Chief Executive of Deltic Energy, commented:
"Over the last year, we have continued to make significant progress in advancing our existing licence portfolio and both materially expanding and diversifying the overall asset base of the Company. We have continued to work closely with our partner Shell on our two most advanced projects resulting in the recent firm well investment decision on the Pensacola Prospect while continuing to move closer to a well investment decision on Selene. The Company continues to execute its natural gas focussed exploration strategy, strengthening its strategic position in the Southern North Sea following another successful outcome in the UK's latest licensing round which doubled the number of licences the company holds. With our attractive portfolio of gas-focussed prospects located close to existing infrastructure, coupled with an improved outlook in the form of commodity prices and increased levels of activity, we are in a strong position to deliver growth. We look forward to further progressing our prospects towards drilling and continuing to develop our partnership with Shell as we move closer to drilling our first well at Pensacola."
To say 2020 was a challenging year would be an understatement in so many ways. It was a very difficult situation to manage for many in our industry but especially for those with complex offshore operations involving workers travelling to and from many places in the UK and the rest of the world. To add to the challenge, global demand along with other external factors caused commodity prices in our sector to fall dramatically.
Setting aside the direct aspects of the pandemic and the roll-out of effective vaccines around the world, we have already seen very strong signs of recovery in terms of our sector.
Just a year ago, in April 2020, a barrel of Brent Crude, a standard indicator for a range of commodities, was trading at about $25. At the time of writing the price is above $60 per barrel. Natural Gas prices have also recovered well.
In the same period, we have seen growing UK Government support, clearly displayed in the publication of the North Sea Transition Deal which the Government announced during March 2021. This clearly recognises the importance of our sector for the UK in terms of security of energy supply, tax receipts and jobs; balanced with our industry's need to play our part in the transition to a net-zero emissions future.
Linked to that, no statement describing our industry in April 2021 would be complete without reference to climate change and plans to tackle the problems we face across the globe as a result of its effects. 2019 was the year the UK Government led the world in being the first to sign into law a commitment to having a net-zero contribution to global greenhouse gas emissions by 2050, following the recommendations of the independent Committee on Climate Change. At Deltic, we support this position entirely and are fully committed to playing our part in the next stage of the UK's development.
This decision by the UK Government shifted the climate change argument from 'the what and the why?' in 2019 into 'the how?' in 2020. This in turn raised difficult questions and caused sensible voices to emerge with solutions showing, among other things, that natural gas is part of the solution and not part of the problem. Combined with hydrogen, carbon capture and storage (CCS) and other technologies, natural gas, the single greatest contributor to UK total energy supply in 2019, remains an important part of an affordable, reliable, low carbon energy mix for the foreseeable future. Clearly, a domestic supply of this natural resource beats imported gas in terms of jobs, Treasury receipts and environmental impact.
Deltic Energy has an excellent position within this context: Planning of our first exploration well is underway at Pensacola with Shell, a worldwide leader in Exploration and Production, as the Operator. Our CEO, Graham, will cover this in more detail but clearly this is a defining moment for our company as we prepare to drill prospects identified by Deltic. Further, this is entirely in-line with our stated strategy of building a conveyor belt of opportunities from identification and acquisition of assets through to discovery. Pensacola will be the first of many prospects to go through this process with Selene not far behind and a series of other prospects including Cadence, Cupertino and others under analysis by interested parties.
16 April 2021
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