TGS has announced a seismic licencing agreement with Orcadian Energy, a low-emissions North Sea oil and gas development business. Orcadian will receive high-quality seismic data as a result of the arrangement, which will disclose reservoir structures as well as the expected fluid type. Orcadian will be able to examine the plethora of development potential and prospects within its North Sea portfolio using the best data available thanks to the agreement with TGS.
· Orcadian will gain access to 2,070 sq km of newly reprocessed and interpreted, high quality 3D seismic data covering the bulk of its licences and enabling evaluation of nearby open acreage in the upcoming 33rd round;
· Near term costs have been deferred and future payments to TGS will largely derive from a 1% royalty on production;
· TGS will, subject to Pilot FDP approval, acquire 100 sq km of new seismic over the important Elke and Narwhal discoveries;
· The North Sea Transistion Authority ("NSTA") has confirmed that acquisition of this data will satisfy the Phase B work commitment on P2482, Orcadian has requested that NSTA allows P2482 to continue into Phase B.
Orcadian has 79MMbbls of 2P reserves in the Pilot field, 78MMbbls of 2C Resources in Elke, Narwhal and Blakeney discoveries, and 191MMbbls of Prospective Resources across its Western Platform licences. Orcadian's understanding of Pilot and Blakeney has already been much improved from interpretation of the data already licensed from TGS. This deal will enable Orcadian to improve its understanding of the full potential of its licences and the surrounding areas to the same level, in advance of the forthcoming 33rd Licensing Round.
TGS seismic data
TGS owns three surveys over Orcadian's licences on the Western Platform:
· the "Blakeney" survey which covers all of blocks 21/22a, 21/26a, 21/27a, and 21/27b. Orcadian has already licensed 205 sq km to enable interpretation of Pilot, Blakeney, Bowhead, and Feugh. This survey was shot in 2012 and was reprocessed in 2019/2020 to benefit from ongoing advances in processing technology as well as to focus on the Tay hydrocarbon bearing horizons;
· the "Catcher North" survey covering all of 21/28 which was shot in 20112/13; and
· the "Catcher" survey covering all of 28/3a which was shot in 2011.
A map of these surveys and their relationship to Orcadian's acreage holdings can be downloaded at this link: https://bit.ly/TGS-Orcadian-seismic
Detais of the Transaction
Under the terms of the transaction TGS has agreed:
- to defer, until Pilot FDP approval, a significant portion of the seismic licensing fees due under the existing licence arrangements;
- to reprocess the 'Catcher' and 'Catcher North' surveys using the same processing sequence as successfully deployed on the 'Blakeney' dataset;
- to licence a further 1,865 sq km of seismic data to Orcadian, under a two-company group licence;
- subject to Pilot FDP approval, to acquire at least 100 sq km of new seismic over Narwhal and Elke; and
- to deliver QI (Quantative Interpretation) products, to carry out seismic modelling and interpret the seismic over the entire area.
In return, Orcadian will grant TGS a 1% royalty on proceeds from future production from its Western Platform licences. On Pilot FDP approval, and concurrent with TGS's commitment to acquire seismic over Elke and Narwhal, Orcadian will pay the outstanding prior financial commitment to TGS. The royalty terms are designed to afford Orcadian maximum flexibility in future fund-raising to stimulate development of this key future hub for UK energy.
The Directors believe this innovative licensing arrangement will enable Orcadian to meet future licence commitments, enhance its understanding of the regional geological setting, and to quantify prospectivity across the entire Western Platform project area; and to do so using the very best available data, reprocessed using the most appropriate parameters to image the Tay reservoirs. This arrangement is intended to create a long-term alignment of interests as well as a close technical working relationship between Orcadian and TGS.
Phase B of P2482
NSTA has agreed to amend the Phase B work programme for Licence P2484, such that new seismic acquired by TGS and licenced by Orcadian under this arrangement will satisfy the amended work commitment. Accordingly, Orcadian has formally requested that P2484 continue into Phase B.
Farm Out of Carra
As announced on 11 October 2021, Orcadian has entered into non-binding heads of agreement with Carrick Resources Limited on the announced farm-out of the Carra prospect. Orcadian confirms it is working with Carrick to progress the farm out agreement and further updates will be available in due course.
Steve Brown, Orcadian's CEO, said:
'We are delighted to have reached this agreement with TGS and look forward to further cementing our close working relationship.
The agreement enables us to use the very best subsurface data whilst giving us access to recent advances in seismic processing to extract understanding from that data. A good subsurface understanding is the foundation upon which we will build our success and securing access to the best data available is essential. We are delighted that TGS have the confidence in our project to enter into this deal under which the vast majority of their return will depend on us successfully taking the project into production. We now have licensed, what we believe is the highest quality data across all of our Western Platform licences, whilst minimising value dilution to our shareholders. This deal ensures a long term alignment between TGS and Orcadian as we seek to make the most of the development and exploration potential of our acreage.'