29 November 2022

Orcadian Energy plc

("Orcadian Energy", "Orcadian" or the "Company")

Memorandum of Understanding with SLB

Highlights

·  Orcadian has entered into a binding Memorandum of Understanding (MoU) with SLB (formerly Schlumberger) to deliver core services for the wells on the Company's Pilot project.

·    SLB made a compelling commercial and technical proposal with a strong focus on decarbonisation.

·    The parties now plan to develop a comprehensive Project Agreement for provision of the services.

Steve Brown, Orcadian's CEO, commented:

"We are delighted to be working with SLB to deliver the Pilot wells. Pilot is currently planned to be developed with thirty-four wells; and delivering those wells for the least cost with the right completion technologies to maximise sweep of the reservoir is critical to the success of the Pilot development.

"Pilot is a key UKCS development project which should pave the way for the industry to unlock up to 3 billion barrels of viscous oil discoveries on the UKCS. By adopting leading technologies, such as polymer flooding and floating wind power, we believe we can deliver these developments with ultra-low emissions that will restore the UKCS to its rightful place as the leading energy basin in the world as we deliver a Secure Transition.

"The early involvement of key supply chain partners such as SLB and Petrofac is essential to ensure that we access the very best technologies and capabilities that the industry has to offer enabling us to successfully deliver the Pilot project."

Rob Fox, SLB's MD for UK & Europe, said:

"SLB is committed to supporting Orcadian Energy in securing accessible and sustainable energy to meet growing energy demand in the UKCS via the Pilot project. We are excited to have the opportunity to work with Orcadian and believe our vast portfolio of energy transition technologies will assist in delivering a highly innovative and decarbonised development project at Pilot.

"Aligned with SLB's new focus on delivering energy solutions at the lowest possible emissions footprint, we believe this prospective project is a tremendous example of how any new North Sea field should be delivered. We look forward to helping Orcadian Energy unlock the value of this superb project."

Background

Orcadian and Petrofac, Orcadian's selected well operator, approached the well services market in July this year to elicit proposals from well service contractors to support the Pilot field well construction programme. SLB made an especially compelling commercial and technical proposal with a strong focus on decarbonisation.  This will ensure alignment of interests between Orcadian and SLB, and provide a strong foundation for the overall project financing and development.

In oil and gas development, we believe nothing matters quite as much as the well-reservoir interface and the well completion itself. Partnering with SLB, which is a global technology company that drives energy innovation and has a wide range of capabilities and technologies, should ensure the successful delivery of the Pilot project.

Petrofac has supported Orcadian since 2018, having assisted the Company in the concept select process, and will be appointed as well operator by Orcadian.

Project Agreement

Orcadian and SLB now plan to develop a comprehensive Project Agreement to detail the terms and conditions for the provision of core services.  The finalisation of the Project Agreement is subject to, amongst other items due diligence and drafting of legal documents, so it is possible that the Project Agreement may not be executed, but the Directors have every expectation that it will be.

In the near term, the Company and SLB also intend to progress a project value optimisation process, SLB will be engaged under a separate consulting arrangement. The intention of this process is to deliver a plan for the drilling and completion of the Pilot wells which will maximise economic recovery and minimise emissions from both the well construction process and the operation of the downhole pumps on the wells.  The Directors believe that having access to the full range of technologies which SLB has to offer will help immeasurably in the process of finalising the Field Development Plan.

The Company also intends to include an incentive arrangement for the contracting partners focussed on delivering the optimum number of wells to maximise efficient sweep of the reservoir, at the least cost, and with the lowest emissions possible.

Additional Commitments

In recognition of the fact that SLB is committing significant resources to the finalising of the Project Agreement, Orcadian has undertaken not to award contracts for the core services to third parties. Furthermore, if Orcadian elects to transfer the operatorship of Licence 2244 to a new operator, it is required to notify SLB and to novate Orcadian's rights and obligations under this MOU to the new operator.

Investor Meet Company Thursday 1st December

Orcadian Energy would like to invite all interested investors to attend a Company presentation hosted by Investor Meet Company at 11am GMT on Thursday 1^st  December 2022.  After the presentations there will be a short Q&A session, however participants are asked to provide questions via the "Investor Meet" platform no later than 9am on Wednesday the 30^th November. 

Interested parties should register for the event via the following link: https://www.investormeetcompany.com/orcadian-energy-plc/register-investor

Investors who already follow Orcadian Energy on the Investor Meet Company platform will automatically be invited.

Presentation materials will also be uploaded to the Company website www.orcadian.energy after the event.

For further information on the Company please visit the Company's website: https://orcadian.energy

Contact:

About Orcadian Energy

Orcadian is a North Sea focused, low emissions, oil and gas development company. In planning its Pilot development, Orcadian has selected wind power to transform oil production into a cleaner and greener process. The Pilot project is moving towards approval and will be amongst the lowest carbon emitting oil production facilities in the world, despite being a viscous crude. Orcadian may be a small operator, but it is also nimble, and the Directors believe it has grasped opportunities that have eluded some of the much bigger companies. As we strike a balance between Net Zero and a sustainable energy supply, Orcadian intends to play its part to minimise the cost of Net Zero and to deliver reliable organic energy.

Orcadian Energy (CNS) Ltd ("CNS"), Orcadian's operating subsidiary, was founded in 2014 and is the sole licensee of P2244, which contains 78.8 MMbbl of 2P Reserves in the Pilot discovery, and of P2320 and P2482, which contain a further 77.8 MMbbl of 2C Contingent Resources in the Elke, Narwhal and Blakeney discoveries (as audited by Sproule, see the CPR in the Company's Admission Document for more details). Within these licences there are also 191 MMbbl of unrisked Prospective Resources. These licences are in blocks 21/27, 21/28, 28/2 and 28/3, and lie 150 kms due East of Aberdeen.  The Company also has a 50% working interest in P2516, which contains the Fynn discoveries. P2516 is administered by the Parkmead Group and covers blocks 14/20g and 15/16g, which lie midway between the Piper and Claymore fields, 180 kms due East of Wick.

Pilot, which is the largest oilfield in Orcadian's portfolio, was discovered by Fina in 1989 and has been well appraised. In total five wells and two sidetracks were drilled on Pilot, including a relatively short horizontal well which produced over 1,800 bbls/day on test. Orcadian's proposed low emissions, field development plan for Pilot is based upon a Floating Production Storage and Offloading vessel (FPSO), with over thirty wells to be drilled by a Jack-up rig through a pair of well head platforms and provision of power from a floating wind turbine.

Emissions per barrel produced are expected to be about an eighth of the 2020 North Sea average, and less than half of the lowest emitting oil facility currently operating on the UKCS. On a global basis this places the Pilot field emissions at the low end of the lowest 5% of global oil production.