Orcadian Energy have announced that the NTSA has granted a two year extension to the Pilot license (subject to conditions), a critical step in the process of completing the proposed farm-out of the license.
If you are new to Orcadian Energy, once you’ve read this blog, have a look at my research note on the company here
In my last blog on the company, I covered the announcement of a proposed farm-in to Orcadian’s ‘Pilot’ project in the North Sea. Pilot is one of the largest un-developed North Sea oil fields and critically it’s development ready meaning its been fully appraised and flow-tested.
Orcadian’s latest announcement has confirmed that the NTSA have extended Orcadian’s P2244 license for two years on the proviso that Orcadian make a submission for an interest in the license to be transferred to the proposed farm-in partner and that the farm-in partner become operator.
This is an important step for the Pilot development and the proposed JV deal completing.
As per my last blog where I covered just how lucrative this deal could be to Orcadian, there are a few other steps required to conclude the overall deal such as re-allocation of the P2320 license (‘out of round’) to Orcadian and the partner given its proximity and logistic importance to Pilot.
This is a great initial ‘thumbs-up’ from the NTSA who are mandated now to ensure UK domestic Oil & Gas production progresses.
Assuming the JV partner completes due diligence by the end of November and a subsequent out of round award is approved for license P2320 and final approval of the FDP is granted, the deal will conclude seeing Orcadian receive a $3m payment from the new operator along with their 18.75% free carried to first oil interest in the Pilot field. As mentioned in my last blog, this deal could equate to c.$200m in value at todays oil price assuming no EPL and and oil price around where it is today.
Orcadian are firmly on the map now when it comes to junior Oil & Gas companies albeit the share price is lagging other popular retail Oil & Gas stocks, many with fewer resources or in less enviable jurisdictions.
As the deal above progresses and additional milestones are reported it’s also worth keeping an eye on news from the 33rd licensing round where Orcadian have made three application, two of which are joint applications with other companies with news on this is expected imminently.
Lastly, lets not forget that Pilot is one license that Orcadian have interests in in the N Sea with others having potentially hundreds of millions of barrels of oil prospectivity!
You can read more in my research note here
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Disclaimer
Research materials prepared based upon my own analysis and research. Accuracy cannot be guaranteed and research notes should not be taken as investment advice. Please always do your own research.
