Prospect off Aberdeen in focus as oil and gas prices surge

A North Sea-focused oil firm has generated interest in a prospect east of Aberdeen amid the rally in commodity prices.

Orcadian Energy said it has agreed heads of terms regarding a deal for Carrick Resources to buy in to acreage containing the Carra prospect, which has been estimated to contain around 30 million barrels.

The prospective deal signals that privately-owned Carrick Resources sees significant potential in Carra.

Orcadian said the two firms are discussing a deal under which Carrick would pay for new seismic data relating to the Carra prospect and take it to drill-ready status. They are working towards executing a formal agreement by December 31.

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Carrick Resources managing director Murray Chancellor said there was still interest in undeveloped North Sea finds, in spite of calls by some campaigners for a curb on oil and gas activity. He noted: “There will be on-going demand for quite a few years during the transition to a low carbon economy.

“With the significant reduction in exploration activity over the last five years, there is potential for a gap in supply to meet the predictions of post-pandemic levels of global demand of more than 100 million barrels per day.”

Mr Chancellor added that the current gas price hike and recent fuel shortages have shown that domestic production is vital for energy security in the UK and factors such as the balance of payments and employment.

Wholesale gas prices hit record levels last week following the recovery in demand which has accompanied the rollout of coronavirus vaccines while oil prices have rallied strongly.

In July Orcadian Energy raised £3 million at 40p per share from investors ahead of completing a flotation which valued the business at £25m.

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The company has drawn on the proceeds to support work on plans to develop the Pilot heavy oil find 85 miles east of Aberdeen. The field is estimated to contain around 80 million barrels but has lain undeveloped since it was discovered by Fina in 1989. Heavy oil can be expensive to produce. Chief executive Steve Brown said the deal under discussion with Carrick could help Orcadian make the most of the exploration potential of its acreage.

Shares in Orcadian Energy closed up four per cent, 1.5p, at 40p

Carrick Resources has worked on another field close to Carra. The company was awarded a 50 per cent interest in acreage containing the Fyne discovery in 2018. Last month it sold its stake in Fyne to Rapid Oil Production, which has won backing from investors to bring undeveloped finds into production.

Subject to formalising an agreement, Carrick plans to farm out a 50 per cent stake in the licence that contains the bulk of Carra to Carrick Resources. Carrick would then be expected to work to recruit other firms to buy in to the prospect, though a further farm-out process.

The Herald Scotland

The Herald Scotland

The Herald is a Scottish broadsheet newspaper founded in 1783. The Herald is the longest running national newspaper in the world and is the eighth oldest daily paper in the world. The title was simplified from The Glasgow Herald in 1992