Deltic Energy is now expecting a lot of news flow to come Selene gas discovery - ICYMI

Deltic Energy PLC (AIM:DELT) earlier this week shared details of a substantial gas discovery at its Selene prospect in the southern North Sea.

Chief executive Andrew Nunn outlined how drilling results exceeded initial expectations, particularly in terms of the reservoir’s porosity and permeability.

This discovery, operated by Shell and supported by Dana as a farm-in partner, is set to become one of the largest finds in the area, with estimated P50 recoverable resources of 131 billion cubic feet.

Nunn acknowledged that although the resource estimate came in slightly lower than pre-drill projections, the discovery remains highly significant. 

Here’s the Q&A transcript of the interview.

 

Proactive: So, you announced a significant new gas discovery at your Selene prospects in the southern North Sea. Tell us more about the prospects and what potential you’re seeing there?

Andrew Nunn: The Selene prospect is something that Deltic originated a few years ago, which resulted in farm-ins from Shell and Dana to progressive drilling.

So, it's a really great result for Deltic. A small team is now two for two in the southern North Sea, and out of those two, it’s two of the three largest discoveries in the southern North Sea in the last ten years or so.

So, you know, a great result for the company. And I think there's a very short runway into development for this project.

So, I think there's a lot of excitement to come.

 

Proactive: Is Shell the operator of the prospect, Andrew?

Andrew Nunn: Yes, Shell is the operator. They've been operating since they farmed in, in 2019. You know, a great operator to have on board, and likewise, Dana, who farmed in more recently, is a great partner and has a long track record in the basin as well.

 

Proactive: So, tell us more about the recoverable resources that you’re seeing there and also the high quality of those resources.

Andrew Nunn: So when we drilled the well, obviously we came in a little bit deep to prognosis, which resulted in P50 recoverable resources of 131 BCF—a little bit lower than what we expected pre-drill, but still probably the second or third biggest discovery since Tolmount.

So, although it’s a little bit on the lower end, it's nothing to be upset about. It's a very good discovery and very commercial in the scale of this basin.

The big upside we got from the drilling is we were expecting this to be quite a tight reservoir, but the results from the logging suggest that we’ve got much higher porosity and permeability than what we expected pre-drill.

So, you know, that feeds into better production rates, a simpler development, and potentially fewer wells to recover the same amount of resource. So, a lot of upside from the reservoir quality upgrade as well.

 

Proactive: You mention in the press release that the development is expected to be straightforward and also relatively low cost?

Andrew Nunn: Yeah. So, this is going to be a very simple southern North Sea development now. I think one of the things we had in our head in the pre-drill, given the expectation about permeability, was we potentially had a large number of horizontal wells that would potentially have to be fracked, which would have driven up complexity and cost.

But given the results, I think we can get away with a fewer number of unstimulated horizontal wells, which just makes life a lot easier as developers.

 

Proactive: So, what are the next steps, and what should investors be looking out for?

Andrew Nunn: So, on Selene, we have a period of post-well analysis which will refine some of our understanding, both of the reservoir and the development options going forward, which will in turn feed into the field development investment decision within about 18 months to two years.

A lot of this will be run by the operator. But, you know, there’s a lot of news flow to come out of Selene.

I guess where we’re also seeing news flow potentially is in our reinvention of Deltic as an international oil and gas player, as we look abroad for further opportunities.