Already hailed as a generational discovery, further post-well analysis of Pensacola has found it is nearly double initial expectations, with material volumes of oil.
Deltic now predicts the field, located on Licence P2252 in the Southern North Sea, to hold best case estimates of 342 million barrels of oil equivalent (boe) of gas and oil.
It means Pensacola – touted as “one of the largest natural gas discoveries” in the sector for over a decade – may hold double the volume of hydrocarbons that were originally estimated.
Shares in London-listed Deltic, holder of 30% of the licence, soared in mid-morning trading as investors reacted to the news.
At the time of writing (10am) they were going for 30p, an increase of around 30% on the start of play.
As a result of the upgrade, Deltic is now forecasting total recovery of about 99 million barrels of oil equivalent (Mmboe), up from the 50mmboe reported after well completion.
Significantly, the firm now believes Pensacola contains material volumes of oil, representing around 30% of the combined recoverable hydrocarbons.
Despite confirming liquid at the prospect, Deltic says gas is still likely to be the initial focus of near-term appraisal and development activity.
Work is now progressing to develop the appraisal and development programme for the field, with an appraisal targeted for late 2024.
A range of potential development scenarios for Pensacola have been drawn up, all of which involve export through a new offshore installation and pipeline to Teesside.
Deltic has also kicked off a formal process to “pursue the value crystallisation options” that exist for Pensacola, involving monetisation and/or farm down of its equity interest in the licence.
Graham Swindells, chief executive of Deltic, said: “The Pensacola oil and gas discovery is transformational for Deltic. Well data indicates that Pensacola contains close to double our original estimate, representing one of the most significant discoveries in the North Sea in many years.
“This is an outstanding result for Deltic. Our success to date reinforces the quality of our technical team and the Deltic model of taking licences from award through to successful drilling.
“We look forward to working with our JV partners to continue moving this exciting asset through the appraisal phase and onward towards development. With the significant additions to our resource base, we will also continue to pursue monetisation options in line with our stated strategy.”
Delivering on the hype
Spudded in November using the Maersk Resilient, the Shell-operated Well 41/05a-2 reached a total depth of 1,965 metres.
Deltic holds a 30% working interest in Licence P2252 alongside Shell (LON:SHEL) (65%) and ONE-Dyas (5%).
As well as being a big win for the companies involved, it is thought Pensacola could open up a new fairway in the Southern North Sea, and give the basin a new lease on life.
A Shell spokesman said: “We are still progressing our technical evaluations of the Pensacola prospect and considering the next stages for appraisal. Pensacola is primarily a gas discovery, and could help reduce the UK’s reliance on higher carbon and costlier energy imports. Locally-produced, responsible oil and gas production is critical for UK energy security and entirely consistent with a net zero pathway.”