Orcadian Energy (AIM:ORCA) on Wednesday said it expects its interest in the P2650 licence to double from 50% to 100% after partner Triangle Energy (UK) Pty withdraws, subject to approval from the North Sea Transition Authority (NSTA).
The AIM-listed North Sea oil and gas company said Triangle UK's withdrawal follows the administration of its parent, Triangle Energy (Global) Limited, in July, after Triangle's joint venture partner Pilot Energy failed to secure funding to buy out the Triangle group's stake in the Cliff Head joint venture.
Orcadian gave notice on 10 September that Triangle UK was in default after it failed to pay a cash call, and on 9 November notified Triangle UK that the remedy period had expired.
Triangle UK has not yet withdrawn from the licence, and completion remains subject to NSTA approval and Triangle UK's continued cooperation, which may be achieved by purchasing Triangle UK for a nominal sum rather than through a licence interest assignment.
Orcadian intends to seek an extension to the term of Phase A, which currently expires at the end of February 2027.
The P2650 licence, known as the Mid-North Sea High licence, and contains the Glenlough and Breckagh shallow gas prospects, which Orcadian considers analogous to the A-block shallow gas fields in the Netherlands developed by Chevron and now operated by Petrogas, and to the Aviat field in the UK central North Sea operated by Apache.
Orcadian estimates the gross cost of each exploration well at between £10m and £15m given the shallow depth of the prospects.
The Glenlough prospect carries an estimated recoverable gas resource of 131bn cubic feet (bcf) with a 31% chance of success, while Breckagh comprises two horizons: Upper Breckagh, estimated at 33 bcf with a 55% chance of success, and Lower Breckagh, estimated at 105 bcf with a 20% chance of success, giving a combined 138 bcf if both succeed.
These are gross unrisked best estimate (2U) prospective resources under the SPE-PRMS standard, effective 1 January, and are stated gross to the licence; Orcadian's net share is currently 50% and would rise to 100% on completion of the withdrawal.
Chief executive Steve Brown said the company was disappointed that Triangle's parent had been forced into administration, calling Triangle "a good partner to us on the Mid-North Sea High licence", and added: "we expect to double our interest in the potential gas resource on our P2650 licence... we are looking forward to redoubling our efforts to attract farm-in partners for these gas prospective blocks."
Orcadian intends to approach potential farm-in partners to progress the Glenlough and Breckagh opportunities once Triangle UK's withdrawal completes.
The P2650 award sits alongside Orcadian's other North Sea interests, including its 100%-owned P2680 licence containing the Earlham and Orwell gas fields, which the company is developing through its Earlham Gigagrid subsidiary toward an on-site power generation and carbon-capture concept, and its 18.75% carried interest in the Pilot viscous oil development operated by Ping Petroleum UK plc.