Cairn Energy will take a 60% stake each in two licences and 70% stake each in three licences, subject to fulfilling certain conditions
Deltic Energy has agreed to farm-out five of its gas licences in the Southern North Sea to Nautical Petroleum, a fully-owned subsidiary of Cairn Energy.
As per the terms of the binding, conditional farm-out agreement, Cairn Energy will acquire a stake of 60% each in the P2428 (Cupertino Area) and P2567 (Cadence) licences. Deltic Energy will retain a 40% stake each in the licences.
Cairn Energy will become the operator of the licences after paying the entire costs of an agreed forward work programmme until the date of making a well investment decision.
The work programme is expected to see the acquisition and processing of new 3D seismic data across the licences and the associated interpretation and studies needed for supporting the investment decision.
In case of a well investment decision made on either of the two licences, then Cairn Energy will cover 70% of the costs of whichever well is spudded first. This will be subject to a gross well cost cap of $25m.
Deltic Energy chief executive Graham Swindells said: “The partnership will result in a significant investment across multiple licences within Deltic’s strategic Southern North Sea gas exploration portfolio, as we jointly progress the next high impact drilling targets.
“It provides further endorsement of the quality of the portfolio that our team has developed and also our gas focussed exploration strategy, as we continue to supply our conveyor belt of opportunities and attract the best partners to facilitate potential drilling.”
In the other three licences, which include P2560, P2561, and P2562 in the South Breagh Area, the company will acquire a stake of 70% each.
Deltic Energy will hold the remaining stake of 30% each in the three licences, which are located between the Breagh and Tolmount gas fields.
Cairn Energy will be appointed as the operator for the three licences after paying the full costs incurred by an agreed forward work programme until the date of making a well investment decision on each licence.
The work programme is likely to see the purchase and reprocessing of legacy datasets for enhancing image quality and/or the acquisition of new 3D seismic data.
This will be backed by the multiple interpretation workflows and other studies needed for making the various well investment decisions on each of the three licences.