North Sea minnow Deltic Energy has seen its shares surge around 30 per cent after it said a find it made that has already generated excitement in the industry could be twice as big as previously thought.

Deltic said analytical work suggested the Pensacola find it made with Shell in November could contain around 100 million barrels oil equivalent of recoverable resources compared with estimates of 50m.

Chief executive Graham Swindells said the results indicated the discovery was one of the biggest made in the North Sea for a long time. He suggested the find could be transformational for Deltic, which had a market capitalisation of £21 million before yesterday’s announcement.

“Well data indicates that Pensacola contains close to double our original estimate, representing one of the most significant discoveries in the North Sea in many years,” said Mr Swindells.

He also highlighted the fact that post-well studies found Pensacola contained oil as well as gas. Oil reserves command a higher valuation than gas.

The results could help to generate renewed exploration interest in the UK North Sea, in which there has been more than 50 years of exploration activity. Activity has fallen to record low levels in recent years.

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Deltic drilled Pensacola in an area in which other firms have been active. Directors decided that by using modern technology Deltic could be able to identify attractive prospects that others had not recognised.

The former Cluff Natural Resources, achieved a coup in 2019 when it persuaded Shell to buy into the acreage containing Pensacola.

Shell decided to go ahead with drilling a well on Pensacola months after the Government introduced a windfall tax on North Sea oil firms. The Government made the move after Shell and other firms operating in the North Sea posted bumper profits following the surge in oil and gas prices fuelled by Russia’s war on Ukraine.

North Sea industry leaders warned the tax would prompt firms to slash investment in the North Sea. Exploration in the area fell to record lows amid the tough market conditions that prevailed before the recovery from the pandemic.

In response to Deltic’s announcement, a spokesperson for Shell said Pensacola could help reduce the UK’s reliance on higher carbon and costlier energy imports.

Noting that Pensacola is primarily a gas discovery the spokesperson noted: “Locally-produced, responsible oil and gas production is critical for UK energy security and entirely consistent with a net zero pathway,”

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The spokesperson added: “We are still progressing our technical evaluations of the Pensacola prospect and considering the next stages for appraisal.”

Partners in Pensacola would need to complete detailed appraisal work before deciding if the  find was big enough to justify the investment required to bring it into production.

Deltic has been considering development scenarios for Pensacola that would involve linking offshore production facilities for the field in the Southern North Sea to Teesside by pipeline.

Mr Swindells said the success achieved by the firm to date showed the quality of Deltic’s technical team and validated its strategy. This involves doing early-stage work to demonstrate the potential of prospects and then recruiting partners to drill on them.

“We look forward to working with our JV partners to continue moving this exciting asset through the appraisal phase and onward towards development,” said Mr Swindells.

He said following the significant additions to Deltic’s resource base, the company would also continue to pursue options to realise the value of its acreage. This could involve selling stakes in licences.

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Mr Swindells took charge at Deltic in 2018.

Founding chief executive Algy Cluff achieved renown after playing a part in the discovery of the Buchan field in the North Sea in 1975. He went on to work in mining in Africa before founding Cluff Natural Resources.

Deltic spurned takeover approaches from IOG and Reabold Resources in 2020.

Shares in Deltic Energy closed up 7p at 30p leaving it with a market capitalisation of around £30m.