Deltic pens Selene gas prospect farm-out deal with Dana

Deltic Energy, a London-listed company, has signed an agreement with Dana Petroleum to the farm-out of a 25% interest in Shell-operated licence P2437, home to the promising Selene gas prospect, it said on February 7.

Under the terms of the agreement, Deltic will retain a 25% non-operated interest in licence P2437. Deltic will transfer its equity to Dana in exchange for $500,000 in cash, reflecting back costs incurred by Deltic. This move positions Deltic to eliminate its estimated cost exposure to the Selene exploration well, scheduled to commence drilling in Q3 2024.

Financially, Dana Petroleum will carry Deltic for its residual cost exposure to the Selene well, covering both non-success scenarios up to $5mn and success cases up to $6mn. Dana will also be responsible for its 25% share of costs from January 1, 2024. With these arrangements in place, Deltic stands to have no cost exposure to the Selene exploration well up to $40 million in the case of a dry hole or $49 million in a success case.

The completion of this farm-out agreement is contingent upon obtaining consent from Shell and standard regulatory consents from the North Sea Transition Authority.

Project preparations for the Selene well are progressing, Deltic said, with geophysical and geotechnical site surveys already completed. Critical long lead items, including casing, have been ordered, and procurement processes, such as the rig contract with Valaris 123, are well advanced. This progress ensures that the Selene well remains on schedule for drilling in Q3 2024.

"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 Q3 2024," Deltic CEO Graham Swindells said.