Orcadian Engy Regulatory News (ORCA)

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 (MAR). Upon the publication of this announcement via Regulatory Information Service (RIS), this inside information is now considered to be in the public domain.

15 June 2022

Orcadian Energy plc

("Orcadian Energy", "Orcadian" or the "Company")

Seismic acquisition and licensing agreement

Orcadian Energy (AIM:ORCA), the low-emissions North Sea oil and gas development company, is pleased to announce a seismic licensing deal with the energy data company TGS. The agreement will provide Orcadian with high quality seismic data, revealing the reservoir structures and even the likely fluid type. The deal with TGS ensures that Orcadian will be able to use the best data available to evaluate the multitude of development opportunities and prospects within its North Sea portfolio.

Highlights

· 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."

For further information on the Company please visit the Company's website: https://orcadian.energy

Contact:

Notes to editors

About Orcadian Energy

Orcadian is a North Sea focused, low emissions, oil and gas development company. In planning its Pilot development, Orcadian has selected wind power to transform oil production into a cleaner and greener process. The Pilot project is moving towards approval and will be amongst the lowest carbon emitting oil production facilities in the world, despite being a viscous crude. Orcadian may be a small operator, but it is also nimble, and the Directors believe it has grasped opportunities that have eluded some of the much bigger companies. As we strike a balance between Net Zero and a sustainable energy supply, Orcadian intends to play its part to minimise the cost of Net Zero and to deliver reliable organic energy.

Orcadian Energy (CNS) Ltd ("CNS"), Orcadian's operating subsidiary, was founded in 2014 and is the sole licensee of P2244, which contains 78.8 MMbbl of 2P Reserves in the Pilot discovery, and of P2320 and P2482, which contain a further 77.8 MMbbl of 2C Contingent Resources in the Elke, Narwhal and Blakeney discoveries (as audited by Sproule, see the CPR in the Company's Admission Document for more details). Within these licences there are also 191 MMbbl of unrisked Prospective Resources. These licences are in blocks 21/27, 21/28, 28/2 and 28/3, and lie 150 kms due East of Aberdeen. The Company also has a 50% working interest in P2516, which contains the Fynn discoveries. P2516 is administered by the Parkmead Group and covers blocks 14/20g and 15/16g, which lie midway between the Piper and Claymore fields, 180 kms due East of Wick.

Pilot, which is the largest oilfield in Orcadian's portfolio, was discovered by Fina in 1989 and has been well appraised. In total five wells and two sidetracks were drilled on Pilot, including a relatively short horizontal well which produced over 1,800 bbls/day on test. Orcadian's proposed low emissions, field development plan for Pilot is based upon a Floating Production Storage and Offloading vessel (FPSO), with over thirty wells to be drilled by a Jack-up rig through a pair of well head platforms and provision of power from a floating wind turbine.

Emissions per barrel produced are expected to be about an eighth of the 2020 North Sea average, and less than half of the lowest emitting oil facility currently operating on the UKCS. On a global basis this places the Pilot field emissions at the low end of the lowest 5% of global oil production.

About TGSTGS provides scientific data and intelligence to companies active in the energy sector. In addition to a global, extensive and diverse energy data library, TGS offers specialized services such as advanced processing and analytics alongside cloud-based data applications and solutions.

About Carrick Resources Limited

Carrick recently completed the sale of its 50% operated interest in the adjacent Block 21/28b (Licence P2451) containing the Fyne Field.