If you are new to Orcadian Energy, once you’ve read this blog, have a look at my research note on the company here where I go into detail on the companies flag-ship Pilot field in the North Sea. Pilot is one of the largest un-developed North Sea oil fields and critically it’s development ready meaning its been fully appraised and flow-tested.

Last week the company announced that they had executed a Sale & Purchase agreement with Ping Petroleum UK plc.

The agreement is for an 81.25% farm-out interest in Orcadian’s Pilot Development-ready project (Licence P2244) 

The deal is conditional upon Orcadian shareholder approval and a few other milestones such as the NTSA transferring the 81.25% interest in the license to Ping and assigning Ping as the field ‘Operator’

The key take-away from the announcement is that Ping have now completed their due-diligence process following the companies prior announcement of the proposed ‘farm-out’. This is a major de-risking step for Orcadian and now pathes the way for the NTSA to transfer the interest in the license.

As I mentioned in my last blog, Orcadian will retain a ‘free-carried’ to first oil 18.75% interest in the license. When I previously ran the numbers at a c.$90 oil price the project interest could be worth up to $200m to Orcadian. not bad for a £12M market cap company!

The company anticipates the deal will complete by end of Q1 2024 whereby Ping will pay Orcadian an initial $100,000, followed by an additional $3,000,000 on approval of the field development plan (FDP). The FDP is already underway and the company anticipate this will be submitted in 2024.

Ping Petroleum

You can read more about Ping Petroleum on their website. The company seems a great fit as a partner for Orcadian as they share Orcadian’s values in developing green energy projects that fit with the NTSA’s net zero goals.

Orcadian also believe that the partnership with Ping will bring additional opportunities in their joint licenses over the wider western platform area in addition to creating a clear pathway for the Pilot field development.

Ping already own their own FSPO (floating production storage and offloading) vessel and have already engaged with a number of other FSPO re-deployment candidates for Pilot. Ping’s expertise in the sector and as Orcadian’s partner is as I said a huge de-risking step for the company.

There will be plenty of news flow to come into 2024, such as completion of the farm-out deal, FDP approval and of course the outcome of Orcadian’s applications for a number of licenses under the 33rd licensing round.

Orcadian are firmly on the map now when it comes to junior Oil & Gas companies albeit the share price is lagging other popular retail Oil & Gas stocks, many with fewer resources or in less enviable jurisdictions.

Lastly, lets not forget that Pilot is one license that Orcadian have interests in in the N Sea with others having potentially hundreds of millions of barrels of oil prospectivity!

You can read more in my research note here