Deltic Energy (LSE:DELT) — Investor Presentation

0:01 Good morning, ladies and gentlemen. Welcome to the DELTIC ENERGY PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the Q and A tab that's situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit

0:33 the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I'd now like to hand you over to CEO, Graham Swindles. Good morning, sir. Morning, Jake, and thank you for that introduction, and thanks to everyone who's attending this meeting this morning. Obviously, we're really looking forward to being able to update investors on recent recent developments. I'm pleased to be joined today by Andrew Nunn, our chief operating officer, and Sarah McLeod, who is our CFO. And although I will be going through the the presentation, just in the interest of of time, Andrew and Sarah will be participating in the the q and a session.

1:19 So really just to to get going, for those of you who who are less familiar with DELTIC as as a company in terms of who we are, what our our strategy is, We're UK North Sea focused gas and oil exploration company. We are a relatively small small team. There's only six full time members of staff here, and that includes, you know, Andres here and myself. I think we punch very much above our weight in terms of what we've achieved over the last the last few years and more more recently. We just drilled our first well on Pensacola, which we're we're incredibly excited about. I obviously have a follow on well with Shell on the Celine prospect, which is scheduled for for next year and, you as as well. In addition to that, we're continuing to to build our conveyor of follow on drilling opportunities both from within the portfolio and further complementing that with through the the various licensing routes where we've been successful in in the past and currently have applications in.

2:17 In terms of our focus, it's very much on exploration and appraisal. That's where the majority of our expertise lies and where we've had more success to to date, particularly in terms of identifying overlooked, less well understood opportunities and bringing in the highest caliber partners such as Shell through a format process and working through those those assets with a view ultimately to taking assets through the through the life cycle, through through drilling, and then being in a position to to crystallize value before before going into into development or or production. To be clear, we, you know, we see ourselves very much as an exploration and appraisal company. We don't have any real desire to become a developer or a producer of of of assets, and our our key is to is to seek to to create value through that that process and ultimately monetize before taking assets into into development.

3:21 Our focus is very much on on gas. The Southern North Sea, it's a world class basin. That's where, say, we've got the majority of our expertise and where we've had significant level of success, which will come come on to. And I think that's very important given the current climate with natural gas being really the the key to the energy tran transition. It's a fuel that's going to be required for for many decades to come, but also recognizing that the The UK has a, you know, declining production, you know, leaving us increasingly relying on overseas imports, which obviously come at far higher sort of carbon, you know, into intensity.

4:07 So we see ourselves having a, you know, a critical role to play in supporting energy security and the energy transition and the drive towards net net zero. So just building on that that portfolio, starting at the, you know, top left with Pensacola, which is the the the well that we just drilled with Shell. We made our first first discovery. It's a 300 b BCF discovery. We've obviously created a a very valuable asset there, one which we're really excited to be able to sort of talk through and provide further color on, you know, today, not just in terms of the the gas discovery that's been made, but also the the potential for follow on opportunity there.

4:55 Then working our way way down, we have the the licenses you see in the in the blue there. This is a contiguous year of five licenses that that Capricorn farmed into in 2021. It's a relatively underexplored area of the Southern North Sea. We've gone and shot new seismic over the most northerly license there going through a process of reprocessing, you know, seismic data with a view to enhancing our understanding of those of those licenses. We see the majority of the opportunity, you know, sitting within the within the Carboniferous, and we're working, you know, very closely with that, with Capricorn towards a potential well investment decision, you know, in the course of of this year.

5:42 And then further down, we have our Selene prospect, which is the next well that we're due to be drilling with with Shell. It's a it's a similar size of opportunity at just over 300 per week BCF, very high chance of success, very close to existing Shell infrastructure, and and really, you know, one which could be brought on stream very, very quickly post post discovery. But, obviously, you know, to say, just off the the East Coast of of of England and all could be brought on stream you know, relatively relatively quickly.

6:17 So, really, what we what we really want to to talk about, you know, most, you know, today is really provide that additional context and color around the Pensacola discovery that we announced last last month, which really is a transformational achievement for for our company. This was our first well, so obviously delighted to have have made a discovery with that with that first well. The the resources or estimate of resources have come in at just over 300 BCF, which is entirely in line with our our predrill estimates. Obviously, we have very much narrowed the, you know, the range there, which is which is fantastic, and that's equivalent about 50,000,000 barrels of oil. So our 30% share is equivalent to about 50,000,000 barrels.

7:09 We targeted the high dollar in a down deck location. And as a result of what we've what we've seen, we've demonstrated a substantial hydrocarbon column of updip. Most interestingly, in addition to to discovering and recovering gas, we've also seen oil covered oil to to to the surface as well, which we'll come on to. That was an unexpected surprise, but what was just potentially create a a an follow on opportunity. And flow rate, certainly, I mean, very much in line with pretest expectations. But what this ultimately means is that we have, as a company, we have our first discovery, and that creates a very significant, you know, asset. And that 30% interest means that we have, obviously, a very valuable, you know, asset, which provides optionality as we as we go through forward through the appraisal and and development phase.

8:09 So just building building on that and the, you know, the our preliminary post well update. Well, I think, first and foremost, the well has achieved all of our all of our objectives going into the well. We wanted to differentiate between two possible geological models, which we've done. We wanted to demonstrate the presence of of of gas, minimum commercial volume with our 300 BCF, your estimates. We very much done that. And we also wanted to demonstrate, you know, movable hydrocarbons on on on test, which we have done, and we'll we'll see more about that in in in a minute. In terms of the the actual well results, we encountered just under 19,000,000 of hydrolyte reservoirs on slope porosity averaging 16%, which was better than we expected, and our current model predicts better quality reservoir across the, you know, top of the of of the reef.

9:12 So it sits in a four way dip post structure, we've demonstrated a very significant hydrocarbon column certainly in excess of of a 100 meters, which is which is excellent. And what that also does is what this well also also does is derisk follow on opportunities on the license that we hold immediately to the north with with Shell, which contains the Pensacola North gas prospect as well as indicates potential for for oil sits beneath the the gas discovery that we've that that that we've made. In terms of test results and and flow rates, the the well flowed at just under 5,000,000 standard cubic feet a day, and water was declining throughout that p that period, which is a positive indicator. It's very much a dry gas that's been being produced.

10:14 We we do see elements of of c o two in in here, but, you know, exactly as you would expect with a with a carbonate reservoir and and not dissimilar to to what we've seen at the discovery. But, also, the the well produced oil, black oil at 34 thirty six eight API, which certainly, yeah, indicates a light oil, which is very, very interesting. It will be the source of further work going going forward. And and whilst those flow rates may not necessarily appear, you know, spectacular at 5,000,000 scuffs a a day, I think it's important to put that in context in terms of, you know, other, you know, analogous or similar wells that have been that have been drilled, you know, in the area, in particular, Brea and Cygnus, which flowed at very similar rates on their on their first well and have gone on to become, you know, very significant producing fields. And in the case of of Cygnus, The UK's largest producing field to this to this day.

11:25 I think just looking at the images that you see on the on the right hand side of the of the slide just to, you know, provide a little bit more color and and context, You can see the, yeah, the black marker is where the the well was drilled on the on the on the fringe there, and that was deliberately, you know, designed in order to to potentially test, you know, both of those geological models. But the outline that you see in the in in the magenta, you know, represents the, you know, the gas discovery, but we believe that there's a potential ceiling to to to the north, which potentially derisks the the Pensacola North prospect, which sits on that license to the north. And, obviously, we have seen the oil below that's that that's outlined below the gas, which a low case would would sit beneath that and in a in a high case could potentially extend to the the the bottom half of that of that structure and sort of, you know, the orange outline that you see on on the left there. So I think what I really want to to convey here is, first and foremost, we've achieved all of our pre drill objectives.

12:42 We have made a a very, very significant gas discovery. We have potentially derisked further opportunity to the north. And also, we have we see potential in the oil which is being discovered. Although I think it's important to say at this point, it's very early, you know, in the and probably too early to to be definitive about the the potential of that. But certainly, you know, you know, a very significant, you know, discovery and the, you know, the potential for additional resource that is in addition to what we've what we've discovered and something which gives us a tremendous foundation for which to to build.

13:32 So what does that mean in terms of in terms of next steps? Well, we we move into the appraisal planning phase, and the first part of that is lab analysis in terms of what's being what's being recovered and a and a period of post well analysis in order to to work out the the conceptual development plan and confirm the requirement for for appraisal or appraisal and and development would would look like, determining and agreeing the, you know, objectives for that for that next well, which we would most likely see as, you know, as a horizontal well into the top of the structure and one in which we would see, you know, very significant uplift from the from the flow rates that we've that we've seen today. I think it's important to stress that the that the exploration, you know, well was a was a vertical well into the into the flank of the of the structure. It wasn't wasn't designed to to to maximize flow flow rates, and also there was an element of reservoir damage, which occurs, you know, during the the the drilling, which is, you know, not unusual, which is certainly potentially constrained those those flow rates. So the flow rates that we've seen so far, we're very, very happy with with those, but certainly, we would expect to see, you know, any future, you know, appraisal or production wells that drilled horizontally into the top of the structure, you know, producing, you know, very, very significantly higher

15:02 flow flow rates, but we're going through, you know, that that process, you know, now in terms of the, you know, the the next steps in terms of in terms of of appraisal. But what what that really means is that we have we now have and it's linking back to our and in line with our our strategy, which is to take assets through through exploration, make discoveries, and then potentially monetize. We are now in a position where we have a very valuable, you know, asset and one which does give us the the optionality now to look at value crystallization, which we are now doing, and that will will and can take, you know, a number of different forms, varying from

15:47 the disposal of, you know, all our parts of of of working interest for for cash. It could it could involve farmer where we where we stay would retain, you know, a stake but largely mitigate, you costs going going forward. We could look at a swap of our equity interest in in this license in return for the cash flow from from our producing, you know, assets, you know, and and or, ultimately, you know, staying through the through the next phase. But multiple options that that now present themselves for for us as company and and various different options that we are now looking at in line with our

16:28 with our strategy and in order to to maximize value for for our shareholders. So very significant summary, very significant discovery, gas discovery at 300 BCF for the follow on opportunity to to to the north.

16:44 And as mentioned, the the oil is a is a a very interesting and unexpected discovery, and we'll be looking closely at the the opportunity that that that presents. But, ultimately, we are we're we're now looking at the the options that this that this presents to allow us to to continue to to grow the business and and also to to maximize value for our shareholders. So just moving on to to Celine, which is the the next well that we anticipate drilling with with Shell. This is a four way dip co structure in the in the land, so very established play further to the to the south within within the Southern North Sea.

17:33 It's really covered with three d seismic. The the scale of the of the prospect is very similar to that of of Pensacola again, which is over 300 BCF, so another sort of 50,000,000 barrel oil equivalent prospect. Very high chance of success. We we run at 70% chance of success, and that's partly driven by the fact that the previous well, you can see just on the bottom of that structure, the 488 B 2 Well,

18:06 has seen gas, so it's been indications of gas in a downed location that was drilled into a fault. But we it's all intensive purposes. You know, we see this opportunity as being more keen to to that of of an appraisal well given the given the risk profile and the and the chances of success.

18:29 It's one of the largest, if not the largest, unapproised structure in this in this fairway, one which has been been overlooked by by previous operators and one which has further follow on opportunities. You can see the Indemion prospect sits to the north, which wouldn't necessarily work on a stand alone basis. But if if Celine is successful, then then it opens up the potential to, you know, to to look at that Indian prospects, you know, as as well. So a significant further follow-up opportunity. This sits right in the middle of an area which is rich in in infrastructure. It's 20 kilometers to the the north of Shell's bark operated infrastructure, which feeds into Clipper and then turn into into into Baton.

19:18 So it could be brought on stream relatively quickly and has the potential to to extend the the the life of of a lot of the infrastructure and fields around around this area.

19:31 So in terms of the commercial aspects of of of this, we are carried for half of our costs up to $25,000,000. So, you know, Shell effectively paid 7575% of those those costs, whilst we retain a very healthy 50% working interest, which, again, provides a significant amount of flexibility for for further farm down. In all the farm downs that we've that we've done, we've always retained a very healthy working interest, which does give us that further flexibility and scope to to further farm down.

20:10 So we anticipate this being drilled probably in the middle of the middle of next year. Well planning has already commenced. We anticipate, you know, doing the you know, further site doing our site survey later later this year, probably towards the the end of the summer over long lead items with a view to that being being drilled most likely in the middle of in the middle of next year. But very significant,

20:36 you know, opportunity here in terms of in terms of evaluation, you know, given the 50% working interest and a very substantial substantial opportunity. So you can see there $259,000,000 net. This is on an NPV 10 basis. So a very valuable asset,

20:59 one which we have very high hopes for. So very, very much looking forward to to drilling that next year alongside the the Pensacola appraisal well, which we would ideally hope to do back to back. I think most of you are probably I'll be aware of of what we've seen in in in both UK, you know, European, and for that matter, global gas gas markets. I don't suppose to spend too much time on the on the graph on the on the on the left hand side.

21:30 Obviously, we saw a very significant spike in the course of the last year or so for the, you know, tragic events in in in Ukraine. I think anyone expected gas prices to to remain anything close to those levels, and that's certainly what we've seen. But I think the important thing to take away from from this is that what what we what we do appears to have seen is something of a structural shift in in gas markets such that the long term forward curve is very significantly higher than than it has been historically and above 80p a third out to actually 2028. I think it's important to stress at this point, we are we're not in the business of of predicting gas prices, which is why we we set out indicative success case, you know, valuations here on the right hand side on on a on a range. We run our economics at 80p a fair, which we believe is very, very conservative in the in the light of the current spot price and the and

22:30 and the forward and the forward curve. But this just really gives an indication of the the very significant upside that we that we see, you know, in terms of the value just over two most advanced, you know, assets, I. E, Celine and and Pensacola at £12.07 per per share amount of on on assumption of 80p per per fair. It's also important, I think, just to demonstrate that even at much lower gas gas prices that these projects that that we have are very, very robust e economically and work right into 30p a fair and and the law. So really just an indication of the of the potential, the success case potential of of both Celine and and Pensacola.

23:22 So just moving on. Whilst the majority of our portfolio is based in the in the Southern North Sea and the gas gas basin, we do have an oil prospect which sits in the Central North Sea, known as the the prospect. It's a rotated full mark fall block, which would it should be an image on newly reprocessed, you know, three d seismic and newly reprocessed, you know, seismic that's that that we've worked through now demonstrates, you know, a very robust structure. It's analogous to similar fields at Wood and Shaw, which you can see on that map on the on the right hand side and very it's it's very, very close to the Monarch infrastructure that you see there. So we brought on stream, you know, very, very quickly following a discovery there.

24:19 It's it's a very yeah. A a nice little prospect at 25,000,000 barrels of oil. I think, importantly, the the work that we've done has significantly derisked the the chance of success. So we're running with 58% chance chance of success, so which makes this a very attractive, you know, prospect for for for anyone to to to drill. It's normal pressure, normal temp temperature, 90 meters of water depth, which led itself to to jack up, you know, drilling and has the benefit of multiple offtake options. So we recently commenced a format process on on CEROS. We're engaged with a number of of counterparties, and we're ultimately seeking to to track and establish the operator with a view to to make a commitment to to drilling that that well most likely towards the end of of twenty twenty four, possibly into '25 depending on timing of that that farm out process.

25:24 But a great prospect in what would we feel strongly, you know, needs to be drilled. So maybe just the last kind of cup couple of slides, we've covered the majority this, but this really just gives an indication of the level of activity that we see across the the portfolio, what the key catalysts are likely to be for the company and what's really gonna drive that activity useful and, hopefully, value for shareholders, starting with the the two assets that we have with Shell and Pensacola and Celine, the the various licenses that we have with with Capricorn that we're working forward towards a well investment decision to far right process on on Syros. And lastly, but by no means least, our is our participation in the latest UK licensing road.

26:16 As most of you probably probably know, that, you know, everything that we've done as a company has has been on the back of successfully applying for for licenses, growing the business organically through those licensing rounds and building up the portfolio that that way. So we've made a number of applications in the latest round, which closed in January. We have interviews with the NSTA in in June, and we would expect awards to be made sometime later later this year. That way gives us the opportunity to further grow and enhance, you know, the portfolio. We've always been clear that we wanted to build build the company on a portfolio basis, build an ongoing constant conveyor of of drilling opportunities and ensuring that and recognizing the exploration, you know, is inherently risky that we diversify that that that risk by having a portfolio based approach and and and such that we are not entirely dependent on the outcome of of one or or or two or two wells.

27:22 And we would we'd seek to continue to do that. So really just to to to wrap up, I don't really propose to to talk to this, but I do, you know, strongly believe that DELTIC has a unique proposition for a company of our size given the the quality of the of the asset base that we have, what we built up. And the discovery that we just made, you know, really reinforces the the DELTIC, you know, business model, which is to take, you know, assets that overlook to less well understood. You're working them up, getting them through, making making discoveries with a gas focus in that world class gas space. And I think as a company, we're very well positioned. We've created a fantastic foundation for which to to continue to to grow off the back of that discovery, but we'll obviously with further wells to be to be drilled in terms of appraisal in Pensacola and further exploration on on Celine as well as the the rest of the portfolio, and, obviously, seeking to continue to to grow the the portfolio.

28:29 So, you know, a lot to look forward to exciting exciting times for, you know, for us and and our and our shareholders as we strive to to create value for for our shareholders. So that ends the formal formal presentation. At this point Graham, absolutely. And Andrew and Sarah as well, if I may just jump back in there, and thank you very much indeed for your presentation this morning. If I may, will just bring back up your camera there. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that situates on the top right hand corner of your screen. But just while the team take a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q and A can be accessed via your investor dashboard.

29:25 Graham, Andrew, Sarah, we did obviously receive a number of pre submitted questions ahead of today's event. And as you can see in the Q and A tab as well, we've also received a number of questions throughout your presentation this morning. So firstly, thank you to all of those on the call for taking the time to submit their questions. And, Graham, perhaps if I may hand back to you to chair the q and a session with the team, and then I'll pick up from you at the end. Thank you. Absolutely. Well, thank you. Thank you, Jake. There have been quite a number of presubmitted questions. There is a number of overlaps in certainly in terms of some some of the questions. So apologies in advance if the if the the question is not read out, you know, exactly as it was as it was submitted because a number of the questions have been have have been amalgamated where there's a common theme.

30:13 But we'll now take the opportunity to go through, certainly, the first and foremost, the presubmitted, you know, questions and also, like, take the opportunity to to bring Andrew and and and Sarah in to to this process. So first first question that we have here that's been pre submitted is is a question around Pensacola. The question is how far press are in discussions work on Pensacola and what options are being evaluated. Andrew? Yep. So, clearly, we are sort of only a couple of weeks into the ongoing post lab analysis for the the samples and data that collected from that Pensacola well. And, you know, we're using that to update our sort of geological model for Pensacola in the short term. And once we've completed that work with the with the partnership, we'll look at what the appraisal program needs to be, especially in terms of the the gas discovery initially.

31:09 And that sort of appraisal program, you know, it takes a lot of work to get that in the right shape because that is the next critical step in determining what we need for any future field development plan and any export infrastructure that we'll need to build to produce the gas from Pensacola. You know? And at the same time, we obviously, as Graham touched on, we'll evaluate all the follow on opportunities such as Pensacola North that's been materially derisked by the results that we've had from Pensacola. And another another big sort of focus of our effort over the next few months will be on understanding the upside associated with the oil that was recovered during testing, which, you know, was a you know, it's an intriguing bit of upside there potentially. And because of all that work that's ongoing to try and work out exactly what those results mean for the wider pencil collar area and the upside available, it's been a little bit premature to go out to industry for any sort of other discussions, but we are actively assessing what options are available to us going forward in terms of monetizing the asset, but also making sure we stay exposed to the future value uplifts through appraisal and any potential upside associated with that oil scope.

32:25 Great. Thanks, Andrew. So next question. Can you talk a bit more about current efforts to monetize some of the old assets respecting commercial sensitivity, obviously, also in light of insights gained from the first Pensacola drill? Well, I think, first and foremost, we the outcome on on Pensacola has exceeded all expectations that that that we've that we've had both in terms of the gas discovery, but also the potential, you know, following opportunities that that it that it presents. So we do have a as Andrew has mentioned, we have a a period of post well analysis that that we need to we need to go through because I think it's important for us to to fully understand the true potential, both of the discovery, but also the, you know, the other other opportunities that exist within not only this license, but the license that we have to the north with with Shell.

33:28 But so we need to wait until that is that that is completed to be able to to do anything on a on a a meet really meaningful basis. But we are now starting to to consider what those options will look like for for for monetization in terms of what the market looks like for a potential disposal of parts or or or indeed all of the, you know, interest in in in Pensacola or a partial farm down, which we'd see us carried through the the next the next phase of of development or indeed, you know, a swap of an element of of equity in in Pensacola for a cash flow from a from a producing asset.

34:15 But what we clearly want to do is ensure that anything that we do, you know, maximizes share value for for for shareholders, and it's important that we go through, you know, this process that Andrew has really, you know, outlined in terms of the in terms of the next steps because certainly one of the things I'm conscious of is that up until now, we haven't really had the opportunity to fully convey the, you know, the true extent of of what we've discovered and what the potential may may be. We're seeking to address this through, you know, this meeting and and other meetings we're doing, and then, hopefully, over time, as further information, you know, evolves from from that from that process. We are actively actively looking at monetization options following that exciting discovery.

35:05 Next question. Given the less than favorable outlook for UK energy firms and new UK offshore projects, would it not make sense to monetize assets or minimize exposure to The UK more so as if a labor if a labor administration assumes power as they have conveyed that the environment for hydrocarbon extraction will only get more warmers. I'm gonna take the the last part of that question. You know, first, I think, you know, as a as an industry, political risk, you know, always always exists. We've seen that with the with the EPL, which has affected a lot of UK producers even though DELTIC actually benefits in many ways from the the EPL as a result of the the investments allowance, which which allows EPL paying your operators to offset, you know, over 90% of their their costs against EPO profits and makes DELTIC's assets, you know, arguably, you know, even more attractive than they than they already are. In terms of the specific question around, you know, labor administration, I think that despite what, you know, sort of statements that have been have been made, like, even the labor administration recognizes the the importance of maintaining a domestic production and the critical role that companies such as

36:36 DELTIC have in in maintaining that that production and creating those those opportunities to to maintain a domestic domestic industry in terms of supporting energy security and the transition to to to net zero. And, obviously, as a a predominantly gas focused company, I think we're we're very well placed to do that. You know, in terms of the in terms of The UK and and its position, I think we've gone a long way to demonstrating the the potential and and future potential that the North Sea holds. We've got a very high quality portfolio of of licenses and drill opportunities, and we still see a very significant amount of of opportunity that The UK and and then all sea in particular presents for a company like us.

37:36 Do you need to raise capital through a secondary offering? I think that's one for Sarah. Yep. I'll take that one. So, obviously, successful drilling and and with the discovery, it's all just going to lead to requirement for more investments taken through to the appraisal of production, the development and production phase phase of the asset. What I can say is following our fundraise last year, we are, you know, funded until early twenty twenty four. So we have no near term immediate capital requirements for that. Given we're in a strong strategic position with material stake in a large gas discovery in the North Sea and that we won't be drilling or drilling will be in 2024, And we we are confident we've got time prior to starting drilling and to be able to secure a a funded solution for for these assets.

38:35 Now whether that's through monetization of Pensacola or looking at the the equity position that we have in Saline, we've also got that very high equity position there. I'm confident we'll have have a a solution before we start drilling next year. And given the number of options that the went through, it doesn't necessarily mean that we have to go back to the equity markets. Thanks, When is a deal expected to be completed on CIROS? So as was touched on in the in the presentation itself, we are in the middle of a farm out process for the CIROS opportunity in the Central North Sea, and we're engaged with a a number of interested parties on that process. At the same time, we recognize that the timetable for that has been impacted by a number of external factors, including priority changes for potential partners in relation to the EPL and the tax regime, and also in the outcome of the third to third round process with companies potentially wanting to wait and see what they are awarded as a result of that before they commit to other projects as well. So, you know, we've always running that delicate balance between trying to secure a deal quickly and being a little bit more flexible on a timetable to ensure some competitive tension and getting the best deal in the long run. So, you know, that's always a a balance we're trying to run with. So we're hoping to wrap something up in the next few months.

40:03 Great. Could you explain in the simplest terms for non technical investors the increase in the chances of success for the Celine prospect? We updated some some time ago. And has DELTIC engaged in following discussions for the projected 2024 drill, given 50% share of the license? And if so, how will progress with these discussions? Okay. Yep. So we'll deal with the check success bit first. Clearly, when we applied for the license, we didn't have full access to all the data. And so we it was a little bit of a preliminary stab at what the chance of success might be. But as we continued into it and really got down into the the nitty gritty detail of the prospects, that chance success is upgraded based on two key pieces of work.

40:54 The first bit was the depth conversion study, which, you know, we were very confident that that then demonstrated the fully deep close structure was robust. And the second bit of work that really contributed to that was the petrophysics study of the existing forty eight eight B two well completed by the JV, and that basically confirmed the presence of gas in that down dip well. So both of those combined materially derisk the asset value. So that's why the chance of success was raised from about 50% up to 70%. In terms of farm out, so, you know, the 50% interest in saline does present opportunities to farm down. And if we feel that that is the appropriate way forward, you know, we we might go down that route. But today, we've held off making that decision.

41:45 And, really, that's based on we needed to understand the outcome of PENSCOL before we made any decisions about the future of that equity stake in Saline. So that is all being considered in the round at the moment. K. That's good. Is DELTIC exploring options outside of The UK? Well, I think I've kind of alluded to to to that, and I think the short answer to that is, you know, we're not currently looking outside of The UK. We spent, you know, a number of years building, you know, a fantastic portfolio of high quality assets, demonstrated the ability to bring in to bring in partners and see wells drilled. We just made our our first discovery. I think it got a long way to to demonstrating the the DELTIC business model and the follow on potential that exists, you know, within the North Sea and certainly within our our portfolio.

42:39 Think we certainly have more than enough opportunity within within our portfolio to keep ourselves, you know, busy for for the foreseeable future. But, you know, as as we mentioned previously, continuing to to build that portfolio of of opportunities in the North Sea, in particular, Southern North Sea where we see ourselves having the the most amount of, you know, expertise and success to date. Given the management change at Capricorn, what is the status of the licenses that DELTIC shares with Capricorn? Okay. So I guess there's two levels to this question. So at the asset level and the technical level, we see Capricorn continue to invest a significant amount of time and money into the JV assets, and we are jointly maturing the sort of really extensive prospect inventory that we've developed over the last year or so.

43:35 And the real aim for that technical work is to get us to a position where we can shortlist a number of high impact prospects that will support a positive well investment position going forward. But as the question alludes to, you know, we are and everybody is quite aware that Capricorn are undergoing strategic review following the appointment of a new board in February. And a lot of the the way forward for these assets will really depend on the outcome of that strategic review. So we expect that to be published at about towards the end of April, and, you know, we will continue to to work with Capricorn in that period to put us in the best position going forward. Great. Thanks, Andrew. How much does The UK windfall tax regime affect the valuation of your assets? That's one for you, Sarah.

44:26 And, you know, the EPL has obviously weighed heavily on on our industry. But with all all change, there's there's opportunity, and and and EPL does provide an opportunity for DELTIC. And that comes in so firstly, DELTIC are not not EPL paying, but the opportunity comes with the investment allowance. So investment allowance is where EPL paying companies can offset 91% of the cost in exploration result and development against their EPL taxes. It's a significant allowance for for an industry. So if you if you put that in context of an exploration well costing £25,000,000 for an EPL paid company, it only actually cost them two. Likewise, when you move it into development, if you spend the best part of £200,000,000, the EPL might only cost an EPL paid company actually under $2,020,000,000 pounds.

45:23 In terms of this, this can can add significant amount of value in terms of of the economics of licenses assets that that fit into the sweet spot of of the EPL investment allowance. DELTIC's assets sits in that in that sweet spot whereby they can attract the the investment allowance, but not actually paying any EPL given the given the timing first production and and the the current cessation or plant cessation of of EPL. So it gives us a huge opportunity. It's really how EPL paying companies is industry may look at our assets because a significant amount of of opportunity to to shelter EPL cost for them.

46:10 So in terms of of monetization, particularly Pensacola, there's there's scope there for for extra value to be added to to our assets and and help with negotiations. K. Thanks, Sarah. Final pre submitted question. It's quite pertinent but important one to to to answer. Why following the the result of Pensacola as the share price being so disappointing? Well, it's a very good question. One which, you know, shareholders ourselves, we are, you know, extremely frustrated, you know, about one which doesn't really make a a great deal of sense to us. They are but I can, you know, hazard sort of, you know, a number of of suggestions that clearly have been certain, you know, headwinds that the industry has faced in terms of gas prices and the and the the windfall windfall tax even though as a non EPL paying company, as you guys described, presents an actual opportunity for for us.

47:17 I think there's been, you know, an element of speculation around the the potential need for for further funding. And, inevitably, you know, a discovery does does create a requirement for further investment in the in the in the next in the next phase. It's an inevitable part of of exploration. But, hopefully, as as Sarah has has described in terms of our our our funding position requirements, we are well funded well into to 2024 and have, you know, no immediate requirements for for further for further funding. And on top of that, we obviously, we are, you know, exploring various options for for monetization, which may ultimately, you know, mean that we have no requirements at any stage to to go back to to equity markets.

48:10 But I think the one of the I think one of the key the key factors as well has been the the the fact that we haven't really had the the opportunity up until now. We've been somewhat constrained in terms of how much we've been able to say about, in particular, about Pensacola, the gas discovery that we've made, and the potential follow on, you know, opportunities that really convey the true extent of the the potential value associated just with that asset alone, and that's certainly something which we are seeking to to to address as a means of seeking to to narrow that that valuation, you know, gap because, you know, fundamentally, you know, DELTIC is at these levels, it you know, is significantly undervalued.

49:01 So that concludes the the presubmitted questions. I think, you know, just looking at the questions that have come through, you know, the majority of them, certainly, I I would say, have been have been dealt with through the the presentation and the presubmitted q and a. There was one one question that is, you know, that's come come through probably for for Andrew, which is a very specific question around Pensacola and and when Pensacola would be deemed to be unrisked. Yeah. And I guess there there's two elements to that risk or unrisked question. Certainly on the geological side and the presence of gas, etcetera, we would say that the prospect is now on risk from a geological chance of success.

49:49 I guess to layer over that, we still have a commercial chance of success to consider, and that's more about the commerciality of flow rates and gas price and things like that. So a lot of stuff out without control to some extent. So from a geologic point of view, definitely unrisked. From a commercial point of view, I think the volumes are there. They are very much a commercial volume, and the risk we're dealing with now is is about flow rate and, you know, CapEx costs, OpEx costs, and gas price going forward. And, you know, those things will all be taken into account as we develop the field development plan, which will, you know, be optimized to to deal with a lot of those sort of outstanding commercial risks. Great. Graham, Andrew, Sarah, thank you very much. If I may just jump back in there, thank you very much, for addressing all of those questions, that came in from investors. And, of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended for you to review. So then add any additional responses, of course, where it's appropriate to do so, and we'll publish those responses, on the investor meet company platform.

50:57 But, Graham, just before redirecting those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments to wrap up with, that'd be great. Absolutely. Thank thank you, Jake. First of all, thank you to to everyone for taking the time to participate in what is our our first investor meet company, you know, event. We certainly appreciate feedback on that basis to of of doing of doing further further meetings, how you felt it it went. But I think just to to wrap up, DELTIC has, in my opinion, a unique offering and opportunity, you know, here in terms of the the quality of the portfolio, the quality of the, you know, assets and drilling opportunities that that that we have.

51:46 We have drilled our first well, and we've made a fantastic discovery and created, yeah, a wonderful footprint from and a foundation from from which to to build and continue to to grow the the conveyor of of opportunities which we see both within the portfolio and for that matter, you know, continuing to build. And I believe this is all driving towards creating value through the through the drill bits and continuing to to build the build business, make make discoveries with exciting wells to be to be drilled in the course of next year, you know, further appraisal on on Petsacola, saline well to be drilled, further opportunities coming out of our our JV with with Capricorn, our follow-up process in Cirrus, of course, the the new licenses that we've applied for. So a lot of activity, a lot of an exciting period. I think the future is very bright for for for DELTIC a lot to activity to to look forward to as we strive to create value for our shareholders.

52:55 Graham, that's great. And Andrew and Sarah as well, thank you once again for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of DELTIC ENERGY PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.