Orcadian Energy PLC Draft FDP and Farm-out Process Update (5523O)
June 13 2022 - 2:00AM
UK Regulatory
TIDMORCA
RNS Number : 5523O
Orcadian Energy PLC
13 June 2022
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 (MAR). Upon the
publication of this announcement via Regulatory Information Service
(RIS), this inside information is now considered to be in the
public domain.
13 June 2022
Orcadian Energy plc
("Orcadian Energy", "Orcadian" or the "Company")
Draft FDP and Farm-out Process Update
Orcadian Energy (AIM:ORCA), the low-emissions North Sea oil and
gas development company, is pleased to provide the following
update.
Highlights:
-- The Company has submitted a draft Field Development Plan for
the Pilot oilfield to the North Sea Transition Authority (NSTA)
-- A structured farm-out process has been initiated for the Pilot oilfield
-- New tax regime has transformed economics of North Sea investment for tax-paying companies.
Summary
Orcadian has 79MMbbls of 2P reserves in the Pilot oilfield and
the Pilot oilfield Field Development Plan ("FDP") builds upon work
done in the concept select process which culminated in NSTA sending
a "letter of no objection" to the low-emissions concept selected by
Orcadian, as announced on 1 December last year.
Orcadian's proposed low emissions, FDP for Pilot is based upon a
Floating Production Storage and Offloading vessel (FPSO), with
thirty-four wells to be drilled by a Jack-up rig through a pair of
well head platforms and provision of power from a floating wind
turbine. Emissions per barrel produced are expected to be about an
eighth of the 2020 North Sea average, and less than half of the
lowest emitting oil facility currently operating on the UKCS. On a
global basis this places the Pilot oilfield emissions at the low
end of the lowest 5% of global oil production. The draft FDP will
be discussed and agreed between NSTA and Orcadian over the coming
months but it cannot be approved until the associated development
finance has been finalised. The structured farm out process, that
has been initiated for Pilot, is a key part of that process.
At the same time, the Directors understand that the introduction
of the Energy Profits Levy ("EPL") by the UK Government last month,
has radically improved the economics of a farm-in deal for some
potential farminees. Whilst the EPL did introduce a further tax on
profits from UK oil and gas companies, it also introduced
significant investment allowances to encourage oil and gas
companies to reinvest their profits to support the economy, jobs
and UK energy security. Accordingly, for companies that pay both
EPL and UK ring fence corporation tax (a modified form of
corporation tax only payable by the UK oil and gas industry), the
after-tax cost of development could be reduced by up to 75% when
compared with a non-tax paying company. The Board believe that this
will make investment in the development of the Pilot oilfield an
increasingly attractive opportunity.
There is more information on the workings of the UK ring fence
tax system, and the impact of the EPL, available in a Treasury
briefing note here: https://bit.ly/Treasury_EPL
Steve Brown, Orcadian's CEO, said:
"Submission of the draft FDP is a further important milestone
for the Pilot development and highlights the maturity of the
project. Our focus on minimising emissions means that the project
will be especially attractive to companies that wish to drive down
their emissions intensity whilst the introduction of the investment
allowances as part of the Energy Profits Levy will surely
incentivise operators to double down on investing in domestic
energy security. We look forward to a heightened level of interest
in our project and providing further updates as the process
progresses."
For further information on the Company please visit the
Company's website: https://orcadian.energy
Contact:
Orcadian Energy plc + 44 20 7920 3150
Steve Brown, CEO
Alan Hume, CFO
-------------------------
WH Ireland (Nomad and Joint Broker) +44 20 7220 1666
-------------------------
Katy Mitchell / Andrew de Andrade (Nomad)
Harry Ansell / Fraser Marshall (Corporate
Broking)
-------------------------
Shore Capital (Joint Broker) +44 20 7408 4090
-------------------------
Toby Gibbs / Liam Zabludowicz (Advisory)
-------------------------
Tavistock (PR) + 44 20 7920 3150
-------------------------
Nick Elwes / Simon Hudson orcadian@tavistock.co.uk
-------------------------
Charlesbye (PR) + 44 7403 050525
-------------------------
Lee Cain / Lucia Hodgson
-------------------------
Notes to editors
About Orcadian Energy
Orcadian is a North Sea focused, low emissions, oil and gas
development company . In planning its Pilot development, Orcadian
has selected wind power to transform oil production into a cleaner
and greener process. The Pilot project is moving towards approval
and will be amongst the lowest carbon emitting oil production
facilities in the world, despite being a viscous crude. Orcadian
may be a small operator, but it is also nimble, and the Directors
believe it has grasped opportunities that have eluded some of the
much bigger companies. As we strike a balance between Net Zero and
a sustainable energy supply, Orcadian intends to play its part to
minimise the cost of Net Zero and to deliver reliable organic
energy.
Orcadian Energy (CNS) Ltd ("CNS"), Orcadian's operating
subsidiary, was founded in 2014 and is the sole licensee of P2244,
which contains 78.8 MMbbl of 2P Reserves in the Pilot discovery,
and of P2320 and P2482, which contain a further 77.8 MMbbl of 2C
Contingent Resources in the Elke, Narwhal and Blakeney discoveries
(as audited by Sproule, see the CPR in the Company's Admission
Document for more details). Within these licences there are also
191 MMbbl of unrisked Prospective Resources. These licences are in
blocks 21/27, 21/28, 28/2 and 28/3, and lie 150 kms due East of
Aberdeen. The Company also has a 50% working interest in P2516,
which contains the Fynn discoveries. P2516 is administered by the
Parkmead Group and covers blocks 14/20g and 15/16g, which lie
midway between the Piper and Claymore fields, 180 kms due East of
Wick.
Pilot, which is the largest oilfield in Orcadian's portfolio,
was discovered by Fina in 1989 and has been well appraised. In
total five wells and two sidetracks were drilled on Pilot,
including a relatively short horizontal well which produced over
1,800 bbls/day on test.
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