REG - Orcadian Energy PLC - Potential Farm-in and Proposed Long Term Loan

Orcadian EnergyAnnouncement

22/05/2024 07:00

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RNS Number : 3678P  Orcadian Energy PLC  22 May 2024

 

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY THE COMPANY TO
CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION
(EU) NO. 596/2014 AS IT FORMS PART OF UK DOMESTIC LAW PURSUANT TO THE EUROPEAN
UNION (WITHDRAWAL) ACT 2018, AS AMENDED. UPON THE PUBLICATION OF THIS
ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INFORMATION IS
CONSIDERED TO BE IN THE PUBLIC DOMAIN.

 

22 May 2024

Orcadian Energy plc

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

Potential Farm-in to the SNS Licence

Proposed Long Term Loan Agreement

Orcadian Energy (AIM:ORCA) is pleased to announce that it has agreed a
non-binding Heads of Agreement ("HoA") with a potential farm-in partner (the
"Partner") on its recently awarded SNS Licence:

Summary:

·    Outlines a potential farm-in to Orcadian's proposed SNS licence; which
provides the partner with a period of commercial exclusivity - Orcadian
announced the offer of award of the SNS Licence on 7 May 2024;

 

·    Details the key terms of a proposed long-term loan of $1.4m, payable
to Orcadian, from an affiliate of the Partner;

 

·    Delineates further opportunities to work together to generate low
carbon electricity for customers.

Farm-in Deal

·    The SNS licence contains the Earlham discovery, with a P50 contingent
resource of 114 bcf of sales gas, a potential redevelopment project to blow
down the now decommissioned Orwell gas field, which Orcadian believes can
deliver over 30 bcf of gas and the Clover prospect which has a P50 prospective
resource of 153 bcf of gas.

·    The Partner will acquire an interest in all, or part of, the SNS
licence; Orcadian will remain operator of the licence until the assessment
phase for the Earlham project is complete at which point the Partner is
expected to become operator to prepare the Field Development Plan ("FDP") and
to deliver the project.

·    On completion of the transaction the Partner will pay Orcadian a, to
be agreed, fee and will fund all the Earlham and Orwell development costs, the
SNS Licence work programme and other licence costs until first gas production.

·    Orcadian has granted the Partner a commercial exclusivity period until
31 December 2024, for both parties to complete definitive documentation for
the overall deal.

·    This is a provisional agreement and there can be no guarantee that the
transaction will complete. Any deal is subject to, amongst other matters,
execution of licence documentation, completion of due diligence, negotiation
of documentation, and various regulatory consents as well as Board approvals
of the Partner and Orcadian.

Long Term Loan

An affiliate of the Partner has agreed in principle to loan Orcadian $1.4m for
a period of up to two years. The loan is intended to be settled from the
completion payment due under the proposed farm-in arrangement. There would be
no fees or interest payable in the event that the farm-in deal completes.

In the event that the farm-in deal does not complete, for whatever reason,
including a notice by the Partner that it no longer wishes to complete the
farm-in to the SNS licence, interest will be payable at a rate of 6% and
Orcadian will provide the Partner with a security over its 18.75% interest in
the Pilot field.

It is intended to complete the loan documentation so that drawdown can occur
before 13 June 2024. The purpose of the loan is to enable Orcadian to repay
the outstanding loan to Shell, pay certain corporate liabilities and meet
general and administrative costs.

 

Steve Brown, Orcadian's CEO, said:

"We have been approached by a partner that shares our vision of developing
Earlham. We have been very impressed with the maturity of our potential
partner's concept and are keen to explore this and other opportunities to work
with them."

"We are delighted that the partner also intends to provide a loan facility as
part of this overall deal and it is our intention to use the proceeds of that
loan to settle our outstanding debt to Shell."

 

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.

The SNS licence, 100% Orcadian, contains the Earlham discovery, a low-calorie
gas discovery with 114bcf of methane resources on a P50 basis, the Clover
prospect which has P50 prospective resources of 153bcf, and the decommissioned
Orwell field which has redevelopment potential, alongside a number of smaller
prospects.

 

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