Shell and Cluff ‘remain committed’ to two UK wells but one well delayed

Shell and Cluff Natural Resources remain committed to drilling the Pensacola and Selene prospects, located in the Southern North Sea off the UK, despite the coronavirus pandemic.

However, while Pensacola is slated to be drilled in the first half of next year, the Selene well will now be drilled in 2022.

Cluff has also decided to change its name as it transitions into a more operational phase.

In its operational update on Thursday, Cluff said that together with Shell it remains fully committed to drilling Pensacola and Selene prospects and the company is fully funded for its share of the costs of both wells.

Commenting, CEO Graham Swindells, said: “Despite the major impact of Covid-19 on our industry, we have continued to progress our core gas projects. We are delighted that Shell remains committed to drilling both the Pensacola and Selene wells and we remain fully funded for our share of both wells”.

Shell is the operator of the P2252 license, which holds the Pensacola prospect, with a 70 per cent interest and Cluff is a partner with the remaining 30 per cent interest.

According to Cluff’s update, the ongoing processing of new 3D seismic, acquired by Shell over the Pensacola prospect and legacy seismic data, remain on track, with Shell delivering an initial pre-stack time migrated (pre-STM) seismic volume in April 2020 with a full suite of final products due for delivery in August 2020.

Based on this early review of the data it is considered likely that a preliminary pre-stack depth migrated volume, due for delivery towards the end of June 2020, will be of sufficient quality to allow the beginning of the various subsurface workflows to proceed towards making a decision on a firm well commitment.

Shell and Cluff are confident they can meet the timescales defined by the UK Oil and Gas Authority (OGA) in relation to the existing contingent well commitment as set out in the licence agreements, and an exploration well is anticipated to be drilled in H2 2021.

Cluff stated it remains fully carried through the work programme and for all associated licence costs by Shell until the earlier of 31 December 2020 or the date on which a well investment decision has been confirmed and is fully funded for its net share of drilling costs.

The Pensacola prospect contains estimated unaudited P50 recoverable prospective resources of 309 BCF (approximately 50 million barrels of oil equivalent) in a Zechstein structure, which appears analogous to the recent Darach and West Newton discoveries.

A number of potential commercialisation options exist via the existing Breagh infrastructure or a new pipeline to Teesside. Gas has already been proven in the Zechstein on block in the three wells previously drilled to test the Lytham-Fairhaven structure

The Selene prospect is located in license P2437 where Cluff and Shell each have a 50 per cent interest. Shell completed the farm-in into Cluff’s Selene license in August 2019.

At the time, Shell indicated its intention to commit to drilling an exploration well on the Selene Prospect at the soonest possible opportunity.

After a period of intensive technical work undertaken jointly by Shell and Cluff, the Joint Venture is approaching the clearance of all outstanding technical milestones and progressing towards a well investment decision, Cluff said on Thursday.

Both Shell and Cluff remain committed to drilling the Selene prospect, however, in light of the current investment environment it is anticipated the Selene well will now be drilled in 2022.

P2437 contains unaudited P50 prospective resources estimated at 291 BCF (or approximately 50 million barrels of oil equivalent). The Selene prospect is considered low risk with an estimated Chance of Success of 39%.

A number of other smaller prospects have also been identified on the block which will be evaluated in due course. The prospect is located approximately 20 kilometres from Shell-operated infrastructure associated with the Barque gas field, which ultimately feeds the Bacton gas processing plant also operated by Shell.

Cluff Natural Resources has proposed to change the name to Deltic Energy but this proposal was subject to shareholder approval.

Following an AGM on Thursday, the name change was approved with the majority of votes in favour of the proposal.

The company explained that the change of name reflects recent progress, changes and symbolises the transition in the company’s main investments into a more operational phase.

Following the passing of this resolution, the change of the company’s name to Deltic Energy Plc will become effective once Companies House has issued a new certificate of incorporation reflecting the change of name.