A North Sea-focused exploration specialist has provided evidence that oil and gas firms still see lots to go for in the area amid uncertain times in the industry.

Deltic Energy said it expects to drill a well on a big gas prospect in coming months after winning backing from UK and overseas heavyweights for its plans.

The company confirmed that it had completed a deal to sell a 25% stake in the Selene prospect to Korea National Oil Corporation, which was agreed in February.

Selene is one of the biggest undrilled prospects in an area in which firms have found lots of gas over the years. It is estimated to contain more than 50 million barrels oil equivalent.

Completion of the deal should pave the way to Deltic starting drilling work on Selene in July with KNOC and with the mighty Shell.

Deltic sold a 50% stake in Selene to Shell in 2019.

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Shell’s decision to go ahead with drilling on Selene suggests that giants still see potential to make commercially viable finds in the North Sea in the wake of a series of controversial tax changes.

Industry leaders have highlighted the uncertainty that firms have faced following the introduction of the windfall tax in May 2022, amid the surge in oil and gas prices fuelled by Russia’s war on Ukraine. The rate of the levy was increased in November of that year.

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The month after Deltic agreed the terms of the Selene deal with KNOC, Chancellor Jeremy Hunt extended the term of the windfall tax by a year, to 2029, in his Spring Budget.

Firms can benefit from generous investment allowances that were introduced alongside the windfall tax.

Shell may be prepared to take a chance on Selene because a previous bet it made with Deltic appeared to pay off handsomely.

When it cut the Selene deal with Deltic, Shell also bought a stake in the Pensacola prospect in the North Sea from the company.

The firms drilled a well on Pensacola last summer, which Deltic chief executive Grham Swindells said delivered transformational results for the firm.

 “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 the Glasgow university graduate in July.

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With a market capitalisation of around £35 million, Deltic remains a relative minnow in the industry. Its valuation could increase significantly if the Selene well hits the mark.