TIDMORCA
RNS Number : 2960M
Orcadian Energy PLC
11 January 2023
11 January 2023
Orcadian Energy plc
("Orcadian Energy", "Orcadian" or the "Company")
Proposed Disposal of Crinan and Dandy discoveries
Highlights
-- Orcadian has entered into a non-binding Heads of Agreement
("HoA") with Rapid Oil Production Ltd ("Rapid") to dispose of its
interests in the Company's non-core Crinan and Dandy
discoveries.
-- Rapid is progressing the development of the nearby Fyne
field, with the intention of achieving FDP Approval in 2023, and
could bring Crinan into production as part of the Fyne cluster in
phase two or three of the field development. This could potentially
be followed by a Dandy tie-back via Fyne.
-- If this progresses to completion, Orcadian would receive a
cash consideration of US$500,000 (US$100,000 on signature of a
binding Sale and Purchase Agreement, and US$400,000 on Crinan FDP
Approval) plus a royalty on oil and gas produced from the
fields.
Steve Brown, Orcadian's CEO, commented:
"We are delighted to have reached an initial agreement with
Rapid Oil, on the proposed disposal of these non-core assets. Rapid
Oil are focussed on achieving a development plan approval for Fyne
and Crinan and we believe they will be best placed to develop the
Dandy fields through the same infrastructure. We look forward to
converting these heads of terms into a binding agreement and will
provide further updates as negotiations progress; and we look
forward to potentially sharing in the cash flow from these
discoveries if these fields are developed."
Hallvard Hasselknippe, Rapid Oil Production's CEO commented:
"We are pleased to add the potential of the Crinan and Dandy
resources to our field development plan for the Fyne field, this
adds approximately 7 MMbbl to our contingent resources. In
particular Crinan will be a very cost efficient add-on as it can be
drilled from the Fyne Central location."
The heads of terms are subject to, amongst other items, due
diligence, North Sea Transition Authority ("NSTA") consent and the
finalisation of binding legal documents. Accordingly, there can be
no guarantee that a final agreement will be entered into or that
this disposal will complete.
Background
Crinan and Dandy were discovered by Mobil in 1987 and 1990
respectively, and appraised by Monument in 1998. Crinan straddles
the boundary between 21/28a, Orcadian's block, and 21/28b, Rapid
Oil's block, whilst Dandy lies entirely within 21/28a. These fields
were not included in the Company's CPR contingent resource estimate
as they were considered non-core and not material to the overall
Orcadian proposition, but were included as upside potential in the
Company's CPR (see page 146 of the Company's Admission Document,
available on the Company's website)
Follow this link for a map of the proposed Crinan and Dandy
subarea: https://bit.ly/Dandy_Crinan
Heads of Agreement
Rapid has agreed to pay an oil price dependent royalty which
ranges from 2.5% to 4.0% for production from these fields. Rapid
and Orcadian have also agreed that Orcadian's deemed equity share
of the Crinan discovery is 60%. Rapid Oil will additionally pay a
1% royalty to TGS ASA.
The intention under the HoA is that Rapid will pay Orcadian
US$100,000 on signature of a binding Sale and Purchase Agreement
plus a further US$400,000 on Crinan FDP Approval. These payments
will be treated as a pre-payment of the royalty due to
Orcadian.
There can be no guarantee that the fully termed deal will be
agreed, nor that oil will be produced from these assets. In
addition, if production is achieved any royalty payment would be
spread over the life of the Crinan and Dandy developments
(anticipated to be 10 to 20 years). Crinan and Dandy are
discoveries on which Orcadian has undertaken no exploration
activities, there is no turnover or profits attributable to the
Crinan and Dandy sub-area. The Company currently ascribes a nominal
value to the Crinan and Dandy sub-area of licence P2320. However,
if the conditions of any future Sale and Purchase Agreement were to
be satisfied and a royalty was to be paid, the Directors believe it
could be meaningful.
Qualified Person's Statement
Pursuant to the requirements of the AIM Rules and in particular,
the AIM Note for Mining and Oil and Gas Companies, Maurice Bamford
has reviewed and approved the technical information and resource
reporting contained in this announcement. Maurice has more than 33
years' experience in the oil & gas industry and 3 years in
academia. He holds a BSc in Geology from Queens University Belfast
and a PhD in Geology from the National University of Ireland.
Maurice is a Fellow of the Geological Society, London, and a member
of the Petroleum Exploration Society of Great Britain. He is
Exploration and Geoscience Manager at Orcadian Energy.
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)
Tavistock (PR) + 44 20 7920 3150
Nick Elwes / Simon Hudson orcadian@tavistock.co.uk
Charlesbye (PR) + 44 7403 050525
Lee Cain / Lucia Hodgson
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. Orcadian's proposed low emissions, field
development plan for Pilot is based upon a Floating Production
Storage and Offloading vessel (FPSO), with over thirty 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 a tenth
of the 2021 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 field emissions at the low end of the
lowest 5% of global oil production.
About Rapid Oil
Rapid Oil Production Ltd ("Rapid") is a private, UK registered
company founded in 2015. Rapid is a specialised development,
production and financing company with desires to unlock and develop
stranded assets through fully integrated production appraisal,
early production or full field developments projects with a focus
on the UKCS. The company's main strategies include a combined
production appraisal approach to improve reservoir knowledge;
optimisation of the the field development plan to maximise recovery
and minimise greenhouse gases; and working with tier one
contractors in an integrated team to reduce risks, improve
efficiency and to develop attractive economics with short
investment cycles.
Rapid is currently planning development of the Fyne field as a
tie-back to the Triton FPSO operated by Dana Petroleum Ltd.
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