NSTA ready to grant two-year license extension to Orcadian Energy
The North Sea Transition Authority (NSTA) is ready to agree a two-year extension to the second term for the Pilot license to UK-headquartered oil and gas company Orcadian Energy.
As announced in September, Orcadian entered into a non-binding heads of agreement (HoA) with a North Sea operator which provided a period of exclusivity to undertake due diligence on P2244 and execute definitive documentation for a farm out, by November 30.
The HoA outlines that the North Sea firm will become the operator of the Pilot development and will acquire an 81.25% interest in licence P2244. Based upon the competent person’s report (CPR), the new operator will acquire net reserves or resources of 63.4 MMbbl on completion of the deal, with Orcadian retaining 14.6 MMbbl of 2P reserves, carried to first oil.
The work program included in the P2244 extension request, submitted by Orcadian, was prepared jointly with the proposed operator, and the documentation preparation is proceeding to plan.
Orcadian now announced that the NSTA had confirmed that, on the basis of the work that Orcadian and the proposed operator intend to undertake, it is prepared to agree to an extension to the second term of license P2244, subject to certain conditions.
The extension would change the expiry date of the second term of P2244 from November 30, 2023, to November 30, 2025.
The extension is conditional on Orcadian’s submission, before November 30, 2023, of an application for NSTA consent to the assignment of an interest in P2244 to the proposed operator, and appointment of the proposed operator as operator.
If NSTA consents are granted, the assignment of the interest in P2244 to the proposed operator must be completed by March 31, 2024.
According to Orcadian, at this stage, there can be no guarantee that the final agreements will be entered into, or that the farm out will complete. However, the directors are progressing on the basis that the agreements will be concluded and that the necessary consents will be forthcoming.
Completion of the transaction would be subject to shareholder approval and the consent of Shell and TGS to the assignment.
NSTA said that should the above conditions not be met, P2244 would automatically cease and determine 30 days thereafter.
“We are delighted that the NSTA provided such a prompt response to our licence extension request, and we are working diligently on the necessary documentation so that we can progress this deal as quickly as possible,” Steve Brown, Orcadian’s CEO, said.
The Pilot development is the largest oilfield in Orcadian’s portfolio. The field was discovered by Fina Petroleum in 1989.