Orcadian Energy Announces Potential Farm-in to its Recently Awarded SNS Licence

Source: www.gulfoilandgas.com 5/22/2024, Location: Europe

Orcadian Energy (AIM:ORCA) is pleased to announce that it has agreed a non-binding Heads of Agreement ("HoA") with a potential farm-in partner (the "Partner") on its recently awarded SNS Licence:

Summary:

· Outlines a potential farm-in to Orcadian's proposed SNS licence; which provides the partner with a period of commercial exclusivity - Orcadian announced the offer of award of the SNS Licence on 7 May 2024;

· Details the key terms of a proposed long-term loan of $1.4m, payable to Orcadian, from an affiliate of the Partner;

· Delineates further opportunities to work together to generate low carbon electricity for customers.

Farm-in Deal

· The SNS licence contains the Earlham discovery, with a P50 contingent resource of 114 bcf of sales gas, a potential redevelopment project to blow down the now decommissioned Orwell gas field, which Orcadian believes can deliver over 30 bcf of gas and the Clover prospect which has a P50 prospective resource of 153 bcf of gas.

· The Partner will acquire an interest in all, or part of, the SNS licence; Orcadian will remain operator of the licence until the assessment phase for the Earlham project is complete at which point the Partner is expected to become operator to prepare the Field Development Plan ("FDP") and to deliver the project.

· On completion of the transaction the Partner will pay Orcadian a, to be agreed, fee and will fund all the Earlham and Orwell development costs, the SNS Licence work programme and other licence costs until first gas production.

· Orcadian has granted the Partner a commercial exclusivity period until 31 December 2024, for both parties to complete definitive documentation for the overall deal.

· This is a provisional agreement and there can be no guarantee that the transaction will complete. Any deal is subject to, amongst other matters, execution of licence documentation, completion of due diligence, negotiation of documentation, and various regulatory consents as well as Board approvals of the Partner and Orcadian.

Long Term Loan

An affiliate of the Partner has agreed in principle to loan Orcadian $1.4m for a period of up to two years. The loan is intended to be settled from the completion payment due under the proposed farm-in arrangement. There would be no fees or interest payable in the event that the farm-in deal completes.

In the event that the farm-in deal does not complete, for whatever reason, including a notice by the Partner that it no longer wishes to complete the farm-in to the SNS licence, interest will be payable at a rate of 6% and Orcadian will provide the Partner with a security over its 18.75% interest in the Pilot field.

It is intended to complete the loan documentation so that drawdown can occur before 13 June 2024. The purpose of the loan is to enable Orcadian to repay the outstanding loan to Shell, pay certain corporate liabilities and meet general and administrative costs.

Steve Brown, Orcadian's CEO, said:

"We have been approached by a partner that shares our vision of developing Earlham. We have been very impressed with the maturity of our potential partner's concept and are keen to explore this and other opportunities to work with them."

"We are delighted that the partner also intends to provide a loan facility as part of this overall deal and it is our intention to use the proceeds of that loan to settle our outstanding debt to Shell."


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