Orcadian Energy PLC on Friday said it has agreed to a seven day extension with a potential, unnamed operator on its P2244 licence for its of its pilot project and flaghsip asset.
Shares in Orcadian Energy fell 6.1% to 20.19 pence each in London on Friday morning.
The North Sea-focused oil and gas development company said the extension is for the operator to execute documentation for a potential farm out deal. The extension will run until next week Thursday.
This comes after Orcadian had entered a non-binding heads of agreement in September with a North Sea operator. Orcadian had granted the operator commercial exclusivity until November 30, to complete definitive documentation for the proposed transaction.
Orcadian said if the deal completes as specified in the HoA, the operator will acquire an 81.25% stake in the pilot project’s Licence P2244 and become the development’s operator. Orcadian will retain an 18.75% carried interest.
Upon completion, Orcadian will also receive up to $200,000 cash consideration from the operator. The latter will pay a further $3.0 million if the companies’ field development plan for the pilot is approved by the North Sea Transition Authority.
Orcadian expects the operator to acquire net reserves or resources of 63.4 million barrels of oil, with Orcadian retaining 14.6 million barrels of 2P reserves carried to first oil.
Orcadian Energy also announced on Friday that it has submitted an application to the North Sea Transition Authority, requesting approval for the appointment of the operator.
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