Deltic Energy has seen its shares lose more ground as the firm races against time to raise the funds needed to allow it to continue work on a prospect that generated excitement in the industry.

Aim-listed Deltic turned heads in February last year when it made what appeared to be one of the biggest North Sea finds for years on acreage it had persuaded Shell to buy in to.

However, the company said on April 30 that it was struggling to secure the funding for its £15 million share of the costs of an appraisal well on Pensacola amid the uncertainty in the North Sea that has followed recent tax hikes.

"The struggle to find a way forward on a project like Pensacola, which is one of the largest discoveries in the North Sea in recent decades, is a real-world consequence of our political leadership using the nationally important oil and gas industry as a political football at a time when energy security is of paramount importance,” said Deltic’s chief executive Graham Swindells at the time.

Labour has said it will increase the rate of the windfall tax introduced in 2022 it if wins the general election that is expected to be held in the second half of this year.

In the April announcement, Deltic said that unless it secured the funding needed by the end of May it would be required to withdraw from the Pensacola licence. Deltic said it would then transfer its interest in Pensacola to Shell and the other partner in the relevant joint venture One-Dyas of the Netherlands.

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Deltic made no comment yesterday. Shares in the firm tumbled five per cent in early trading. They recovered some ground to close down around two percent, 0.25p at 14.25p.

The shares sold for 39p each before the update in April.

Deltic’s experience could lend weight to industry leaders’ warnings that the increase in North Sea taxation could prompt firms to slash investment in the area.

On Monday North Sea heavyweight Serica Energy provided evidence that regulators see potential in the area.

The company won clearance from the North Sea Transition Authority to develop the Belinda find.

Serica said in April that directors had approved the required investment.

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The company’s chairman David Latin said on Monday: “We look to the UK government to implement tax and licensing arrangements that support investments like Belinda, thereby creating UK jobs, earnings and tax receipts instead of increasing reliance on energy imports.”