REG - Orcadian Energy PLC - 33rd Licensing Round Offer of Award

Orcadian EnergyAnnouncement

07/05/2024 07:15

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RNS Number : 2799N  Orcadian Energy PLC  07 May 2024

7 May 2024

Orcadian Energy plc

("Orcadian Energy", "Orcadian" or the "Company")

33(rd) Licensing Round Offer of Award

Orcadian Energy (AIM:ORCA) is pleased to confirm that the North Sea Transition
Agency ("NSTA") announced on Friday 3(rd) May a further tranche of licence
awards in the 33(rd) Round. NSTA has indicated that Orcadian Energy will be
offered a further licence in the Southern North Sea ("SNS") in addition to the
two Central North Sea ("CNS") licences offered on 31 January 2024.

SNS Licence

The SNS licence contains an existing discovery with a high inerts content
(Earlham) and an exciting undrilled prospect (Clover). The Earlham discovery
was made by well 50/26b-6 drilled in 1995 by Talisman, encountering gas in the
Rotliegendes. This was then followed in 1996 by a long horizontal appraisal
well drilled by BP, which tested at over 30 mmscf/day of gas. The test was
curtailed when it was established that the gas contained 49% CO(2) and 9%
N(2). Taking that into account, Orcadian estimate that the Earlham reservoir
contains 114 bcf of sales gas (methane) on a P50 basis. Our preliminary
development concept entails an offshore power station, to be connected to the
grid via a wind farm substation, with integrated CO(2) capture and storage.
This concept would deliver a stable and reliable supply of electricity with
near-zero emissions.

Collaboration with the wind farm operator will be essential to deliver this
project, and we look forward to discussing our plans with RWE who have
recently acquired the rights to develop the Norfolk Boreas wind farm from
Vattenfall.

The licence also contains a compelling gas prospect which the Company has
named Clover, this is a four-way dip closure reservoired in Bunter sands,
analogous to the nearby Orwell Field, that is now decommissioned having
produced over 300 bcf of gas. Orcadian estimate that P50 recoverable resources
in Clover amount to 153 bcf and the geological chance of success is estimated
to be 38%.

The SNS licence covers blocks 49/25b, 50/21a, 49/30a and 50/26.

 

Steve Brown, Orcadian's CEO, said:

"Following on from the very large viscous oil accumulation at Fynn, and the
shallow gas prospects on the Mid North Sea High, we are delighted to have
completed a hat-trick of licence awards with the SNS offer from the NSTA. The
star of this licence is the Earlham discovery which we believe can be
developed as a gas-to-wire scheme with integrated carbon capture. Such an
approach means the project could reliably supply electricity to the UK grid
with near-zero emissions. This is a project that anyone who is concerned with
energy security, grid reliability, consumer bills, and emissions can get
behind, and which demonstrates how our industry can adapt to a Net Zero world.

"In addition, there is also a cracking Bunter sand prospect which was cleaved
in two by the Department of Trade and Industry in 1971, when they put a block
boundary right down the middle of the Clover prospect. This is the first time
in over fifty years that a single license group has the whole prospect in hand
which will enhance any potential farm-out opportunities for the licence in the
future."

 

Map showing location of offered licence (green outline) and the Norfolk Boreas
wind farm area.

For further information on the Company please visit the Company's website:
https://orcadian.energy (https://orcadian.energy)

 

Contact:

 Orcadian Energy plc                                   + 44 20 7920 3150
 Steve Brown, CEO

 Alan Hume, CFO
 Zeus (Nomad and Joint Broker)                         +44 20 3829 5000
 Dan Bate / Alex Campbell-Harris (Investment Banking)

 Simon Johnson (Corporate Broking)
 Novum (Joint Broker)                                  +44 207 399 9425
 Colin Rowbury / Jon Belliss
 Tavistock (PR)                                        + 44 20 7920 3150
 Nick Elwes / Simon Hudson                             orcadian@tavistock.co.uk (mailto:orcadian@tavistock.co.uk)

 

Qualified Person's Statement

Pursuant to the requirements of the AIM Rules and in particular, the AIM Note
for Mining and Oil and Gas Companies, Maurice Bamford has reviewed and
approved the technical information and resource reporting contained in this
announcement.

Maurice has more than 34 years' experience in the oil & gas industry and 3
years in academia. He holds a BSc in Geology from Queens University Belfast
and a PhD in Geology from the National University of Ireland. Maurice is a
Fellow of the Geological Society, London, and a member of the Geoscience
Energy Society of Great Britain. He is Exploration and Geoscience Manager at
Orcadian Energy.

About Orcadian Energy

Orcadian is a North Sea focused, low emissions, oil and gas exploration and
development company. Orcadian may be a small operator, but it is also nimble,
and the Directors believe it has grasped opportunities that have eluded some
of the much bigger companies. As we strike a balance between Net Zero and a
sustainable energy supply, Orcadian intends to play its part to minimise the
cost of Net Zero and to deliver reliable energy to the UK.

Orcadian's key asset is the Pilot oilfield, Pilot was discovered by PetroFina
in 1989 and has been well appraised. The field has excellent quality reservoir
and contains 263MMbbl of a viscous oil ranging in gravity from 17º API in the
South of the reservoir to 12º API in the North. In planning the Pilot
development, Orcadian has selected polymer flooding and wind power to
transform the production of viscous oil into a cleaner and greener process.
Polymer significantly reduces fluid handling requirements and hence energy
consumption as well as boosting recovery. Ithaca Energy, operator of the
Captain field in the Inner Moray Firth, has enjoyed consistent success in
applying polymer flood to the highly analogous Captain field. Following the
recent farm-down of Pilot, the project is now under the stewardship of Ping
Petroleum UK PLC ("Ping") and is intended to be amongst the lowest carbon
emitting oil production facilities in the world.

Ping is progressing a low-emissions, phased, field development plan for Pilot
based upon a polymer flood of the reservoir, a Floating Production Storage and
Offloading vessel (FPSO) and provision of power from a floating wind turbine
or a local wind farm.

Orcadian has an 18.75% fully carried interest in licence P2244 (block 21/27a)
and a 100% interest in licence P2482 (blocks 28/2a and 28/3a). Ping is
operator of P2244 and the Pilot development project. As noted above Orcadian
has also been offered three licences in the 33(rd) licensing process and
expects formal issues of these licences in due course.

The Mid-North Sea High licence contains shallow gas leads. Orcadian applied in
partnership with Triangle Energy, an Australian listed energy company.
Orcadian would be licence administrator and would hold 50% of the offered
licence. The Mid-North Sea High licence covers blocks 29/16, 29/17, 29/18,
29/19, 29/21, 29/22, 29/23, 29/27 and 29/28.

The Fynn licence contains a very substantial heavy oil discovery. About 88% of
the resource on a best technical case is estimated to lie within the area of
the offered licence. Orcadian has been offered a 50% working interest in the
Fynn licence to be operated by the Parkmead Group. The Fynn licence covers
blocks 14/15a, 14/20d and 15/11a.

Orcadian provides below a summary of resources across its licences and newly
awarded licences, still to be formally issued. For licences P2244 (Pilot) and
P2482 (Elke, Narwhal and Elke satellites) the volumes are based upon the CPR
prepared by Sproule in April 2021 net of TGS royalty and including an estimate
of the allocation of production as detailed in the Pilot SPA and JOA. For the
prospects on the new licences, Fynn (Beauly), Lowlander & Midlander,
Glenlough, Breckagh, Earlham and Clover the volumes are either Orcadian
management estimates or Operator management estimates prepared in accordance
with the reserve definitions guidelines defined in the SPE Petroleum Resources
Management System 2018.

 Asset                       Gross                                  Net                        PRMS sub-class           Phase & units      Commercial risk factor  Licence
                             1C           2C           3C           1C           2C     3C
 Pilot*                      58.4         78.8         110.5        9.8          13.6   19.7   Development pending      Oil, MMbbl         100%                    P2244

Source 2
 Pilot periphery             5.9          9.8          17.6         1.1          1.8    3.3    Development unclarified  Oil, MMbbl         80%                     P2244

Source 2 & 7
 Elke Main §                 26.0         45.5         94.9         25.7         45.0   94.0   Development on hold      Oil, MMbbl         79%                     P2482

Source 3
 Narwhal                     4.3          9.2          17.6         4.2          9.1    17.4   Development on hold      Oil, MMbbl         79%                     P2482

Source 1
 Fynn (Beauly)^              175.6        292.3        480.6        77.3         128.6  211.5  Development unclarified  Oil, MMbbl         25%                     P2634^

Source 5 & 7
 Lowlander & Midlander^      17.5         11.6         31.9         8.8          5.8    16.0   Development unclarified  Oil, MMbbl         15%                     P2634^

Source 6 & 7
 Earlham^                    12.5         19.0         29.0         12.5         19.0   29.0   Development unclarified  Gas, MMboe         67%                     Offer^

Source 4
                             75.0         114.0        174.0        75.0         114.0  174.0  Gas, bcf
 Total contingent resources                                                      223.0          Oil & gas, MMboe
 Total contingent resources factored by commercial risk                          103.6          Oil & gas, MMboe

 

 Asset             Gross                      Net                    PRMS sub-class  Phase & units      Geological risk factor  Licence
                   Low      Best     High     Low      Best   High
 Elke Main - West  13.0     22.8     47.5     12.9     22.5   47.0   Prospect        Oil, MMbbl         90%                     P2482

(3C outline §)
Source 3 & 7
 Elke Updip        5.5      17.5     39.0     5.4      17.3   38.6   Prospect        Oil, MMbbl         87%                     P2482

Source 1
 Elke Area 2       4.2      12.3     25.4     4.2      12.2   25.1   Prospect        Oil, MMbbl         64%                     P2482

Source 1
 Clover^           13.8     25.5     45.3     13.8     25.5   45.3   Prospect        Gas, MMboe         38%                     Offer^

Source 4
                   83.0     153.0    272.0    83.0     153.0  272.0  Gas, bcf
 Glenlough^        12.0     21.8     36.7     6.0      10.9   18.3   Lead            Gas, MMboe         31%                     P2650^

Source 4
                   72.0     131.0    220.0    36.0     65.5   110.0  Gas, bcf
 Upper Breckagh^   3.3      5.5      9.2      1.7      2.8    4.6    Lead            Gas, MMboe         55%                     P2650^

Source 4
                   20.0     33.0     55.0     10.0     16.5   27.5   Gas, bcf
 Lower Breckagh^   9.5      17.5     30.3     4.8      8.8    15.2   Lead            Gas, MMboe         20%                     P2650^

Source 4
                   57.0     105.0    182.0    28.5     52.5   91.0   Gas, bcf
 Total prospective resources                           99.9           Oil & gas, MMboe
 Total risked prospective resources                    59.5           Oil & gas, MMboe

 

 Source
 1       Sproule CPR 2021
 2       Sproule CPR 2021 - equity updated
 3       Sproule CPR 2021 - management modified
 4       Management estimate - Licence Application to NSTA
 5       Operator estimate - as presented to NSTA
 6       Operator - earlier Relinquishment Report & Licence Application - both for
         NSTA
 7       Orcadian management estimate of risk factor

 

 Notes
 *      Pilot field net resources include a reduced revenue interest of 10% until the
        carry is repaid
 §      Elke high case is limited to the 2C outline as we have reclassified the 3C
        extension as the Elke Main West prospect
 ^      Resources are on a licence which has been offered for award but which has not
        yet been signed

 

 

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