Deltic farms out UK gas licences to Cairn
UK explorer Deltic Energy has farmed out majority interests to Cairn in five wholly owned gas-prone licences, it said August 12. The deal gives Cairn 60% of P2428 (Cupertino Area) and P2567 (Cadence) and 70% of P2560, P2561 and P2562 between the Breagh and Tolmount Gas Fields.
Cairn will fund an agreed work programme for each of the five licences in their entirety up to the point of making a 'drill or drop' decision on each licence. The plan includes shooting new seismic data for P2428.
When the agreement becomes unconditional, Cairn will further pay Deltic $1mn as its share of Deltic's historic costs for those licences and become the operator.
If a drilling decision is made on either of P2428 and P2567, which contain the most advanced prospects, Cairn will fund 70% of the costs of whichever well is drilled first, subject to a gross well cost cap of $25mn. Completion of the farm out is conditional on the parties entering a joint operating agreement and approval from the upstream regulator the Oil & Gas Authority.
Deltic CEO Graham Swindells said the agreement marked the beginning of "a wide-ranging partnership with Cairn, whose successful history of opening up new basins is aligned with our exploration-focused strategy." It also "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."
Deltic had already farmed out a 70% stake in its Pensacola prospect to Anglo-Dutch major Shell, committing it to a geophysical survey this summer with a view to drilling next spring.