North Sea minnow Deltic Energy has won a vote of confidence from a Korean oil and gas giant sending its shares surging.

Deltic announced yesterday that it has sold a stake in a big North Sea prospect to an Aberdeen based subsidiary of Korea National Oil Company, in a deal that could be worth up to $6.5 million (£5.2m).

The deal will see KNOC’s Dana Petroleum operation buy in to the licence containing the Selene gas prospect. This is estimated to contain more than 50 million barrels oil equivalent resources.

KNOC’s move underlines the potential that heavyweights see in Deltic’s North Sea exploration portfolio.

Deltic previously sold a 50% stake in Selene to the mighty Shell.

The deals struck with KNOC and Shell will put Deltic in what looks like a strong position regarding Selene.

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As Deltic will retain a 25% interest in Selene, it will share in any drilling success.

Deltic said that Shell and KNOC will pay the first $49m of the costs of drilling a successful well and the first $40m in respect of a dry well.

“As a result of the transaction Deltic retains a material stake in one of the highest impact UK exploration wells planned in 2024 while effectively eliminating our estimated cost exposure to the exploration well,” said chief executive Graham Swindells.

Investors appeared to like the look of the deal yesterday. Shares in Deltic Energy closed up 14 per cent, 3.75p, at 30.25p on the Aim market.

Mr Swindells said Dana has a “long history of successful exploration and development” in the North Sea.

KNOC acquired Dana for £1.9bn in 2010 under a drive to grow its international operations. The move allowed KNOC to acquire the extensive portfolio of North Sea assets amassed by Dana in the 14 years it spent under the leadership of oil and gas entrepreneur Tom Cross.

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KNOC’s decision to buy in to Selene provides the latest in a series of endorsements for Deltic’s exploration expertise.

In 2019 Deltic sold a stake in the Pensacola prospect to Shell.

A well drilled on Pensacola last year increased confidence in estimates that it could contain as much as 100 million barrels oil equivalent.

Shell has contracted a rig to drill an exploration well on Selene and to complete appraisal work on Pensacola in coming months.

Deltic launched an exploration drive in the North Sea during the downturn that started in 2014 after concluding that the basin contained areas that had more potential than others had recognised.

The former Cluff Natural Resources made the move under the leadership of Algy Cluff, who played a pioneering role in the early days of North Sea exploration.

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Mr Cluff refocused the company on North Sea exploration after plans it developed to produce gas from burning coal deposits beneath the Forth faced opposition.

Mr Swindells, who studied accountancy and economics at the University of Glasgow, succeeded Mr Cluff in 2018.

Deltic has a market capitalisation of around £25m.

KNOC has supported other North Sea expansion moves made by Dana recently.

Dana has a 50% stake in the Tolmount gas field in the Southern North Sea, which entered production in 2022. It made a find close to Tolmount last year with the Earn exploration well.

Selene and Penscola lie off north-east England.

Deltic also has a stake in the Syros prospect east of Aberdeen.

The company was awarded more North Sea acreage in the latest licensing round.

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It suffered an apparent setback last year after Edinburgh-based Capricorn withdrew from five licences operated by the firms. New management at Capricorn decided to focus on the company’s Egyptian assets. Deltic decided to seek new partners to work on two of the licences.

Deltic said Dana had agreed to pay $500,000 on completion of the Selene deal and to cover up to $6m of the company’s well costs. The deal is subject to approval by regulators and by Shell.