Orcadian Energy, the North Sea focused, low emissions, oil and gas development company, today announced an extension to Phase ‘A’ of Licence P2320 and a resource update.

Highlights:

• Phase ‘A’ of Licence P2320 extended to 14th May 2023 with the Initial Term also being extended to 14th November 2024
• Company has completed a new interpretation of the recently reprocessed seismic data, licensed from TGS in July 2021
• Company estimates that the development area oil-in-place, for Pilot, will increase by about 10% to 15%, compared to the previously estimated and audited volume
• Directors believe that the increase in development area oil-in-place will likely result in an upgrade to recoverable reserves – when the Company’s reserves are next audited
• Bowhead prospect remains a very exciting opportunity and management now estimates the Geological Chance of Success has increased to 65%
• Company intends to update its CPR this year

Steve Brown, Orcadian’s CEO, said:
“We are delighted to have received this extension from the North Sea Transition Authority (previously known as the OGA), which brings the date by which we are required to commit to drill a well on P2320 into line with our Pilot project FDP approval plans.

“The license extension enables us to implement a development plan for Pilot which will set a new standard for low emissions in the North Sea. The Feugh discovery, located on P2320, allows us to efficiently manage excess gas production; and we are grateful to the North Sea Transition Authority for their support, and agreement to our request for an extension to Phase ‘A’ of the P2320 licence.”

Phase A extension

As described in the Company’s admission document, Phase ‘A’ of Licence P2320 was due to end on the 14th of May 2022. Following extensive discussions with the North Sea Transition Authority (“NSTA”), the regulator has agreed to extend Phase ‘A’ of this Innovate Licence to the 14th May 2023. The Initial Term end date of the License has also been extended until the 14th November 2024.

Licence P2320 makes an important contribution to the reduction in emissions from the planned development of the Pilot field. Orcadian’s preferred means of managing excess gas during the Pilot production phase is to be able to inject it into the gas cap on the Feugh reservoir, which lies within P2320. This eliminates any inessential flaring, and means that there will always be gas available to power the highly efficient gas engines which will provide reserve power capacity when the wind doesn’t blow. A reliable back-up system is the key to maximising the utility of wind power for offshore operations.

Resource Update

The Company has also completed its new interpretation of the recently reprocessed seismic data, licensed from TGS, over the Pilot, Feugh and Blakeney discoveries as well as the Bowhead prospect. For Pilot, the Company estimates that the development area oil-in-place will increase by about 10% to 15% compared to the previously estimated and audited volume, which was based on an older seismic survey. The directors believe that this increase in development area oil-in-place will likely result in an upgrade to recoverable reserves, when the Pilot field reserves are next audited. The development area is the region of the field which the development wells will drain and is referred to in the CPR as the ”Reserves Area”.

The Bowhead prospect remains a very exciting opportunity for the Company. The P90–P50–P10 range for recoverable oil has been revised to 8–44–201 MMbbls, using the same methodology as used in the CPR; the previously estimated range of prospective resources was 12–43–105 MMbbls respectively. Extensive geophysical modelling has shown the seismic response to be consistent with other offset discoveries in the prolific Tay reservoir unit. Management now estimate the Geological Chance of Success for Bowhead to be 65%, previously 49%.

The Company intends to update its CPR during 2022 to reflect this new geological and geophysical interpretation and the encouraging, and ongoing, reservoir modelling work, as well as updated development cost estimates.

To enable Licence P2320 to proceed into Phase ‘C’, the drilling phase, the Company will need to present to NSTA a fully financed proposal for a well to be drilled to the Tay reservoir. That well could be a Bowhead exploration well, a production/injection well on Feugh, an exploration well on the Carra prospect, or potentially an updip appraisal well on the Pilot channels, which are a contiguous part of the Pilot field not included in the current quoted oil-in-place.

In respect of Carra, the Company is now finalising the terms of the previously announced farm-out of a 50% interest in the Carra prospect to Carrick Resources.

KeyFacts Energy: Orcadian Energy UK country profile