Energy firm given nine days to finalise North Sea deal

03/06/2024

DELTIC Energy has given an update on its Pensacola farm-out process as it struggles to find someone to put up cash amid UK fiscal uncertainty.

The firm, with a 30% stake in Pensacola, has said that it will be required to withdraw from the Pensacola licence and transfer its interest to the joint venture partners if a deal is not made by June 12th.

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Drilling and assessment Pensacola recently confirmed it as the largest discovery in the southern North Sea in a decade, at 72.6 million barrels.

In a market update this morning, the firm said: “Deltic has been granted a short period of additional time from Shell UK Ltd, in its capacity as Licence Operator of P2252, which will allow Deltic until 12 June to progress discussions with potential counterparties in relation to a possible transaction.

“There is however no guarantee that discussions will be concluded successfully within that timeframe and, in such circumstances, Deltic will be required to withdraw from the Pensacola licence and transfer its interest in Pensacola to its joint venture partners.”

The business blames the UK’s controversial energy profits levy, or windfall tax, for creating fiscal instability and creating difficulties for its farm-out process.

Since the introduction of the windfall tax 90% of UK operators have cut spending in UK waters.

This has led to firms such as the UK’s largest producer of oil and gas, Harbour Energy, looking overseas to diversify its portfolio.

Speaking last month, Graham Swindells, chief executive of Deltic Energy, said: “The struggle to find a way forward on a project like Pensacola, which is one of the largest discoveries in the North Sea in recent decades, is a real-world consequence of our political leadership using the nationally important oil and gas industry as a political football at a time when energy security is of paramount importance.”

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