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Valaris Ltd. VAL, an offshore drilling contractor, has mobilized its 123 jack-up rig toward the Selene well in the Southern North Sea. The Valaris 123 jack-up rig is slated to drill the Selene exploration well in the license P2437, operated by the British energy major, Shell.
Shell’s partner, Deltic Energy, stated that the jack-up rig was mobilized on Jul 21, and is expected to reach its destination shortly. The duration of the journey will be determined by the weather conditions during its transit. The drilling operations for the Selene well are anticipated to begin shortly after that. The planned operations will continue for approximately 90 days.
The well is designed to obtain all the necessary information about reservoir quality and gas composition in the Selene gas field. The information gathered during the drilling process should support the advancement of a field development plan and a final investment decision (FID), without the need for an additional appraisal well.
Subsequently, the joint venture partners decided that a full well test is not required. The decision aligns with the standard oilfield practice, and accordingly, the well will be plugged and abandoned post-completion.
The Selene structure is estimated to hold approximately P50 prospective resources of 318 billion cubic feet (BCF) in the Leman Sandstone Reservoir. The estimates span between P90 to P10 range of 132 to 581 bcf, with a geological chance of success (GCoS) of 69%. Notably, the Leman Sandstone Reservoir is an important interval for all nearby gas fields, such as Barque, Clipper and West Sole.
Deltic Energy farmed out parts of its stake to Shell in 2019 and Dana Petroleum in February 2024. This enabled Deltic Energy to be fully covered for its 25% working interest in the Selene well for up to $49 million, in case the outcome is a success. This amount exceeds the operator's estimated successful well expenditure of $47 million, thereby reducing its financial risk.
Per a statement from Deltic, the Selene exploration well is a first-of-its-kind to be drilled in the UK Continental Shelf (UKCS) in 2024 and is a milestone for the company. Management believes that continued exploration of the UKCS is crucial to ensuring energy security, creating vital jobs in the energy sector and reducing the reliance on higher carbon-intensity imported energy.
Zacks Rank and Key Picks
Currently, VAL carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the energy sector are SM Energy SM, VAALCO Energy EGY and Energy Transfer LP ET. SM Energy presently sports a Zacks Rank #1 (Strong Buy), while VAALCO and Energy Transfer carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.