NORTH Sea-focused Deltic Energy has made what it described as an important step forward as the company eyes big exploration prospects in the area with an industry heavyweight.
Deltic said it has completed gathering seismic survey data covering a “highly prospective” area on which it thinks there could be big finds to be made.
The survey work covers acreage that Edinburgh-based exploration success story Cairn Energy bought into in August.
Deltic chief executive Graham Swindells said at the time that Cairn’s successful history of opening up new basins in countries such as India was aligned with the exploration-focused strategy followed by the company he leads.
He held out the prospect the deal could help Deltic develop a “conveyor belt” of gas assets.
Mr Swindells said yesterday that the results of the seismic survey work completed since the deal was signed are expected to significantly enhance understanding of the multiple gas prospects on one of the licences. They will be key to de-risking future drilling on the licence, he added.
Cairn’s decision to back Deltic’s exploration programme shows that firms still see the potential to make significant finds in the North Sea.
Cairn made the commitment in spite of calls by some campaigners for curbs to be imposed on North Sea developments in order to reduce emissions.
Cairn’s chief executive Simon Thomson said in September that production from the North Sea could help ensure the security of supplies for the UK and provide support on an industrial scale for the required energy transition.
He noted then that Deltic is working on Southern North Sea prospects that could provide gas for use in the production of hydrogen at Bacton, where carbon capture and storage facilities are planned.
London-based Deltic sold stakes in other North Sea licences containing big prospects to Royal Dutch Shell in 2019. First Minister Nicola Sturgeon said last week that the UK Government should not approve Shell and Siccar Point Energy’s plan to develop the Cambo oil field off Shetland, citing environmental grounds.
READ MORE: Shell boss defends Cambo plan and declares North Sea is 'outstanding' basin
Cairn paid Deltic $1m to acquire stakes in five licences and agreed to fund the costs of a work programme on them. It will cover up to $17.5m costs if the firms drill a well on either of the two licences that contain the most advanced prospects.
The farm-out deal completed this month.
Deltic was formerly known as Cluff Natural Resources. It has a market capitalisation of around £30m compared with £950m for Cairn.
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