Deltic Energy has agreed to farm-out five licences in the Southern North Sea to British firm Cairn Energy’s fully owned subsidiary Nautical Petroleum.
Under the agreement, Cairn will purchase a stake of 60% in each of Licences P2428 (Cupertino Area) and P2567 (Cadence).
It will also purchase a 70% stake in each of P2560, P2561 and P2562 licences, which are located between the Breagh and Tolmount gas fields.
In return, Cairn Energy will completely fund an agreed forward work programme for the five licences, until the date of making a well investment decision.
In case the exploration assets advance to drilling, about 70% of the costs of the first well will be funded by Cairn, subject to a cap of $25m.
Deltic Energy CEO Graham Swindells said: “This agreement represents the commencement of a wide-ranging partnership with Cairn, whose successful history of opening up new basins is aligned with our exploration-focused strategy.
“The partnership will result in a significant investment across multiple licences within Deltic’s strategic Southern North Sea gas exploration portfolio, as we jointly progress the next high impact drilling targets.”
The farm-out agreement is subject to the signing of a joint operating agreement and securing regulatory consents.
Upon the completion of the deal, Cairn will serve as the operator of all five licences.
The remaining stakes in these licenses will be retained by Deltic Energy.
Earlier this year, Cairn Energy agreed to sell its interests in two UK North Sea fields to Waldorf Production for $460m.
Waldorf will acquire 29.5% interest in the Kraken field and a 20% stake in the Catcher field.