Shell’s North Sea Selene well ‘continues to impress’ Deltic

A North Sea well operated by Shell has had a “material uplift in recoverable gas volumes” reported by partner Deltic Energy.

Deltic, which holds a 25% interest in the field said the geology – and the economics – of the well “continues to impress”.

The well could net AIM-listed Deltic a post-tax return between $83m and $114m depending on the price of gas – representing a 45% increase, the firm said in an update to the markets Tuesday.

Shell commenced drilling operations at the Southern North Sea prospect last year. The partners are now targeting a final investment decision in 2027.

Following the “material uplift in recoverable gas volumes” Deltic said it has updated its economic model for Selene, but that the partners still plan a two well development with a new unmanned installation tied back to existing production infrastructure on the Barque field via a new  12 mile (20km) subsea pipeline.

Deltic CEO Andrew Nunn said the prospect represented “good barrels” that it has “never been more important for the UK to develop and maximise the benefit of its own resources, like Selene”.

Having faced a drastic fall in its share price over the last 52 weeks, down from 44p to 3p just before trading commenced Tuesday, Nunn said the boost in potential returns was “particularly pleasing, especially within the context of the current market cap of the company”.

He added Deltic continues to “work to secure the funding required to maintain our interest” in the field.

© Image: Deltic Energy

He said: “The six month post discovery checkpoint is always a key stage gate on the path from a gas discovery to a gas development project, and as the technical work gathers momentum we narrow the inherent uncertainties of a new find and get greater clarity on the discovery and its potential.

“The integration of the core data into the volumetric and economic analysis has led to a significant refinement and improvement in Deltic’s understanding of the Selene asset which continues to impress.

“This updated understanding will be critical as the JV moves forward into project scoping and early project design workflows. The circa 45% increase in the NPV10 of Selene net to Deltic is particularly pleasing, especially within the context of the current market cap of the company.

“Recent global events have reinforced the case for maximising the benefits from the United Kingdom’s domestic resources.

“With continued government support for the development of new fields on existing licences there appears to have been a realisation that, while we continue to consume hydrocarbons as a society, then the focus should be on maximising the proportion of ‘good barrels’ in the energy mix.

“These barrels are, or will be, produced locally and, in the case of newer developments, from facilities which are specifically designed with a net zero target in mind.

“Hydrocarbons produced in the UK have a lower emissions footprint than imported oil and gas and are operated under the strictest environmental regulations. They also support high quality UK jobs and provide important tax revenues to the Exchequer.

“We continue to explore various avenues as we work to secure the funding required to maintain our interest in the Selene project as the JV works toward a final investment decision in early 2027. We believe that it has never been more important for the UK to develop and maximise the benefit of its own resources, like Selene, and thereby maximising the proportion of ‘good barrels’ in the mix as we become increasingly dependent on imported oil and gas.”

Deltic now estimates gross 2C contingent resources of 174 BCF at Selene, a 33% increase on earlier estimates

The well could net Deltic a post-tax return between $83m and $114m depending on the price of gas.

It added: “Analysis of the gas samples collected from the 48/8b-3Z well have proven the presence of a very dry, methane dominated natural gas with nominal concentrations of contaminants including CO2 and N2 and our expectation is that gas produced from Selene will require minimal processing to reach National Grid entry specifications.”

Deltic has a 25% non-operated interest in the Shell-operated Selene gas discovery in the Southern North Sea.