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Deltic Energy Announces License P2428 - Prospectivity Update

Source: 11/23/2020, Location: Europe

Deltic Energy Plc is pleased to provide further information in relation to its Licence P2428, which contains the Cupertino Prospect (the "Cupertino Area") following completion of detailed technical evaluation of this key Southern North Sea licence.

Licence Background

Licence P2428 was awarded to the Company in the UK's 30th Offshore Licensing Round with an effective date of 1 October 2018. Preliminary work completed by Deltic to support the application process identified the potential for significant prospectivity in the deeper Carboniferous section. Deltic also recognised the limitations of the pre-existing legacy 2D seismic datasets and the potential uplift in data quality which could be achieved through modern reprocessing workflows.

Throughout 2019, the Deltic technical team worked closely with its selected contractors to reprocess 852 line kilometres of vintage 2D data using a modern Pre-stack Depth Migration ("PSDM") workflow which resulted in a significant uplift in data quality. The technical work completed since the reprocessed seismic data was delivered has not only matured the Cupertino Prospect but has also identified significant previously unrecognised prospectivity in the Rotliegend northern feather edge play as well as the emerging Zechstein Reef play.

The licenced area also contains the depleted and decommissioned Forbes Gas field which produced gas from the Triassic Bunter Sandstone between 1985 and 1995, and which has been previously evaluated for its gas storage potential and its possible suitability for CO2 storage in the future.

Prospectivity Summary

Three geographical prospects have been identified on the licence, which the Company believes are of suitable scale for future commercialisation. The Prospective Resources associated with each of these prospects is summarised in the table below.

Prospect Name: Cupertino Prospect
Reservoir Formation - Scremerston Formation
Prospective Resources (100% Working Interest)
P90: 103 BCF
P50: 379 BCF
P10; 1,060 BCF

Richmond Prospect:
Reservoir Formation - Rotliegend Leman
Prospective Resources (100% Working Interest)
P90: 62 BCF
P50: 211 BCF
P10; 547 BCF
Reservoir Formation - Carboniferous BPU
Prospective Resources (100% Working Interest)
P90: 9 BCF
P50: 32 BCF
P10; 79 BCF

Plymouth Prospect:
Reservoir Formation - Z2 Zechstein Reef
Prospective Resources (100% Working Interest)
P90: 32 BCF
P50: 282 BCF
P10: 1,267 BCF

Graham Swindells, CEO of Deltic, commented:
"The strength and progression of Deltic's growing asset base and its pipeline of drilling prospects continue to be enhanced as we further refine the multiple opportunities it holds. Our technical team continues to produce exceptional work, uncovering more previously unrecognised prospectivity in this underexplored part of the basin. With combined P50 recoverable gas resources in excess of 900 BCF or the equivalent to in excess of 150 million barrels of oil, these prospects are clearly material in terms of their overall scale both individually and collectively. In addition to our Selene and Pensacola prospects with Shell, these Cupertino stacked prospects, coupled with our recently re-acquired Cadence prospect, followed by our other recent licence awards, continue to deliver our stated strategy of developing a conveyor belt of exploration drilling opportunities of material scale. Our attention will now turn to attracting the best possible partner to help us take these opportunities forward towards drilling."

Cupertino Prospect

The Cupertino Prospect is a 4-way dip closed intra-Carboniferous prospect in the Scremerston Formation which is a proven producing reservoir at the Breagh Gas Field and at the Crosgan Discovery located 40 kilometres to the West.

The prospect is mapped on various vintages of legacy 2D data and covers an area of approximately 68 km2 with the structural crest at approximately 3,500m TVDSS and a potential hydrocarbon column height of 220 metres. Based on the work completed to date, Deltic has estimated P50 GIIP for the Cupertino prospect at 705 BCF with a P90 to P10 range of 258 BCF to 1,615 BCF. The company has based its recovery factors on the limited data available from analogous fields and would expect these recoverable resource numbers to be further refined as more drilling data becomes available.

The larger prospect area is divided into a number of fault blocks and would be much better resolved with the benefit of new 3D seismic which the Company believes would be required to support a well investment decision in the future.

Further intra-Carboniferous prospectivity in the deeper Fell Sandstone Formation, which was recognised at the time of application, remains intact. However, the 2D seismic data quality at this level is not sufficient to fully define a prospect and this target will be revisited once new 3D seismic data becomes available across this area.

Richmond Prospect

The Richmond Prospect is primarily a Rotliegend Leman Sandstone opportunity with upside in the underlying Carboniferous within the associated BPU closure. The Richmond prospect is a 3-way dip and fault sealed structure with many genetic similarities, including a northern sediment source, to the giant Cygnus field located 50 km to the East, and currently the largest producing gas field in the UK.

The Richmond Prospect overlies the deeper Cupertino Prospect and covers an area of approximately 70 km2 with the structural crest at approximately 3,040m TVDSS and a potential hydrocarbon column height in excess of 150 metres. Based on the work completed to date, Deltic has estimated P50 GIIP for the Richmond prospect at 494 BCF with a P90 to P10 range of 161 BCF to 1,152 BCF. Recovery factors are based on analogous fields that produce from similar sands in the more mature parts of the basin to the south.

Plymouth Prospect

The Plymouth Prospect is a previously unrecognised Zechstein Reef which is located in a similar paleogeographic setting to the Pensacola prospect on Licence P2252 which Shell farmed into in 2019.

The reef structure covers an area of approximately 161 km2 and builds up to approximately 250 metres above the regional basinal carbonate platform. The structure is mapped based on a number of different 2D seismic surveys of varying vintage and quality and the Deltic team expects the acquisition of new 3D over this area would significantly de-risk this opportunity.

Hydrocarbons are likely to be sourced from the early Carboniferous basin to the south and are expected to be primarily gas, similar to that produced from Cygnus. Deltic currently estimates a P50 GIIP for the Plymouth Lead of 481 BCF with a P90 to P10 range of 56 BCF to 1,990 BCF with recovery factors used previously at Pensacola to determine prospective resources.

The Plymouth structure does extend into the unlicensed area to the east of the P2428 boundary which is subject to development planning for windfarms which may open up opportunities for electrification of offshore facilities, gas to wire based developments or offshore hydrogen production.

A second potential reef structure is noted immediately to the west of Plymouth, although the quality of the legacy seismic data in that area is currently insufficient to define a closing structure or estimate potential volumes associated with this feature.

Next Steps

Given the lack of 3D seismic data in what is a relatively geologically complex area, Deltic anticipates that the acquisition of modern 3D seismic data across the area will be required to further de-risk these prospects and leads prior to drilling.

Following the conclusions of the work carried out to date, Deltic is now starting to engage with a number of its peers and operators with interests in the region with the aim of attracting partners best placed to assist in the maturation of these highly prospective opportunities towards drilling.

Qualified Person

Andrew Nunn, a Chartered Geologist and Chief Operating Officer of DELT, is a "Qualified Person" in accordance with the Guidance Note for Mining, Oil and Gas Companies, June 2009, of the London Stock Exchange. Andrew has reviewed and approved the information contained within this announcement.

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