Orcadian Energy, listed on AIM (Alternative Investment Market), has entered into a provisional agreement with an operator for a potential farm-in to its £1 billion Pilot project located in the North Sea. The operator, whose name remains undisclosed, has been granted exclusivity until November 30 to finalize the deal.

Under the terms of the agreement, the new partner would assume control of the Pilot project, which represents a 97 million-barrel project in the Central North Sea, with an 81.25% stake. The company would be responsible for funding 100% of the pre-first oil scope, while Orcadian would cover its working interest share of expenditures (18.75%).

This development comes as Orcadian Energy seeks a partner to share the costs of bringing the project to first oil, which it had previously estimated to be around £1 billion, with the possibility of cost reductions. Orcadian Energy currently has £90,000 in cash reserves and a monthly burn rate of £20,000.

It's important to note that this agreement is provisional, and there is no guarantee that the transaction will materialize. To facilitate the deal, Orcadian Energy will make an out-of-round application for License P2320, an area it was required to relinquish earlier this year. Both Orcadian Energy and the operator have also requested an extension of the second term of License P2244 for the Pilot project, which Orcadian had previously received an extension for, and it is now expected to expire in November.

Upon completion of the deal, the extension of P2244, and the award of License P2320, Orcadian Energy would receive cash of up to £150,000 from the operator, with an additional £2.25 million upon approval of the Pilot Field Development Plan (FDP).

Orcadian Energy CEO Steve Brown expressed enthusiasm about the agreement, saying, "We are delighted to have reached this agreement, which sets out a potential pathway to production for the Company’s Pilot field. Developing energy in our own backyard contributes to the UK’s Energy Security and balance of payments; delivers long-term high-quality jobs; and minimizes emissions associated with satisfying the UK’s need for energy."