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Cluff ‘in strong financial position’ despite drilling delay at Selene prospect

09:44, 4th June 2020
Francesca Morgan
RNS Newswire
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Cluff Natural Resources (AIM:CLNR) FOLLOW said it is ‘fully committed’ to drilling a Shell-partnered North Sea prospect but that drilling at the Selene prospect is now expected to start in 2022. 
 
The natural resources group, which is to be renamed Deltic Energy after its AGM today, said the Pensacola prospect in the North Sea is still on schedule and anticipated to be drilled in the second half of 2021. 
 
However, Selene, another North Sea joint project between Cluff and Shell, where drilling was expected to commence in 2021, is expected to be deferred to 2022 ‘in light of the current investment environment.’ 
 
Energy giant Shell farmed-in to the gas prospects last year, each having around 50m barrels of oil equivalent, with Shell holding a 70% operated stake in Pensacola and 50% in Selene. 
 
Cluff said it has no direct financial exposure to the disruption caused by the pandemic and current low commodity prices, and that it remains fully funded for its planned drilling operations. 
 
Shares in Cluff Natural Resources were trading 12.90% lower at 0.675p on Thursday. 

CLNR price chartHowever, the company has introduced cost-saving initiatives as a response to the crisis in order to retain a strong financial position and is limiting investment to its core licences. 
 
As a result, spending will be less than £2m in 2020, representing a 25% cut from original budget plans for the year, excluding planned drilling expenditure. 
 
The company said it remains in a strong financial position with cash of £13.2m as at 31 March 2020, resulting in the company being fully funded for its planned drilling operations. 
 
Cluff also said it is hoping to begin a farm-out process for two more of its licences this year, including the Cupertino prospect which it said has received ‘significant attention’, with firms entering non-disclosure agreements in order to review its prospectivity. 
 
Meanwhile, the company also said that ‘the current situation provides a window of opportunity that the company will look to capitalise on.’ 
 
“We believe that current market conditions will further reduce operating costs and may present value accretive opportunities which, with a strong balance sheet and no debt, we look forward to pursuing,” said Graham Swindells, CEO of Cluff. 
 
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