Cairn Farms Into Deltic's North Sea Blocks. Becomes Operator

Cairn Energy, soon to be renamed Capricorn Energy, has farmed into five Deltic Energy's gas licenses in the Southern North Sea, off the UK.

The two companies first announced the farm-out deal in August 2021, and have now received the necessary regulatory approvals from the Oil & Gas Authority and have entered into joint operating agreements for each of the five licenses. Cairn has paid Deltic $1 million by way of contribution towards historic back costs, and will now become operator of each of the five licenses.

Cairn now holds a 60% interest in each of Licences P2428 (Cupertino Area) and P2567 (Cadence) and a 70% interest in each of Licences P2560, P2561 and P2562 which are located between the Breagh and Tolmount Gas Fields.

Deltic now has a 40% interest in licenses P2428 and P2567 and a 30% interest in licenses P2560, P2561 and P2562, and Cairn is funding 100% of an agreed work program for each of the five licenses up to the point of making a drill or drop decision on each licence.

Following a drilling decision being made on either of P2428 and P2567, Cairn will fund 70% of the costs of whichever well is drilled first, subject to a gross well cost cap of USD$25 million.

Since the announcement of the farm-out in August, the shooting of 3D seismic data over Licence P2428 and surrounding areas, a key component of the work program, has started. ION Geophysical is currently in the process of acquiring approximately 700km2 of seismic data, which is focussed on the Plymouth Zechstein Reef Prospect and will de-risk future drilling. The survey is expected to be completed before the end of November with processed data due to be delivered in the second quarter of 2022.

Graham Swindells, Chief Executive of Deltic Energy, said: "Completion of this transformational multi-license farm out marks the formal commencement of our partnership with Cairn which will see significant investment being made in Deltic's strategic Southern North Sea gas exploration portfolio. 

"Ahead of completion of the transaction, we have already begun working with Cairn to progress activities on the licenses. I am particularly pleased that the new 3D seismic survey has commenced so quickly after the announcement of the farm out, demonstrating a shared commitment to immediately accelerate the development of these licenses and hence timeline to potential drilling.

We look forward to building our partnership with Cairn, as we continue to develop our conveyor belt of Southern North Sea gas prospects towards drilling."