SMALL CAP MOVERS: Deltic Energy; Oxford BioDynamics


SMALL CAP MOVERS: Deltic Energy shares rise on rig contract with Shell; Oxford BioDynamics sinks as it might need further funding

Deltic Energy was a notable riser as oil giant Shell made a decision that sets up the AIM-quoted group for a big opportunity in a new gas exploration project off the English east coast.

Deltic has a ‘carried’ 30 per cent stake in the Pensacola exploration well, which this week Shell advanced with the signing-up of Maersk for its Resilient jack-up drill rig – seabed operations are now expected to get underway later this month, followed by the spudding of the well in September.

The news quickly caught the imagination of small-cap investors, at 2.61p the share is up around 11 per cent in the past five days, not least because it will be a high profile well with potential to add meaningful new domestic gas resources in the UK.

Deltic Energy signed a rig contract with Shell for the drilling of the Pensacola exploration well in the North Sea

‘We are really excited about Pensacola,’ Deltic chief executive Graham Swindells told Proactive.

‘It’s a very significant prospect that can be brought on-stream relatively quickly [if the exploration well is a success] and it would be a real play-opener for the Southern North Sea.’

Swindells says Deltic, which has yet to test a prospect in its portfolio, is positioned for ‘transformational growth’ if Pensacola, or one of its other UK North Sea prospects, comes good.

‘We’re a relatively small company, with our market cap (just over £40million today) and our low overhead, we’re really geared for exploration success. So I don’t think I’d be overstating it to say that a success in this well would be absolutely transformational for us and our shareholders.’

Risers this week generally were special situations such as Deltic Energy.

Novacyt was another and also up 11 per cent, to 161p, after the diagnostics company unveiled a test for monkeypox.

David Allmond, chief executive, said: ‘Whilst the risk of transmission of the disease to humans currently remains low, we believe our RUO assays are important tools to assist scientists and clinicians diagnose and monitor emerging infectious disease threats. ‘

Biotechs provided much of the other excitement. Abingdon Health climbed 15 per cent to 10.6p after saying it would receive £8.9million from the Department for Health and Social Care after settling a row over lateral flow test invoices.

Asthma treatment specialist Circassia was on the rise after it agreed the timing of the start of payments worth up to $16.5million from US group BeyondAir.

The two had been in dispute over the licensing of BeyondAir’s LungFit device but reached a settlement just over a year ago.

Under the terms of the agreement, Circassia surrendered its rights to the product in return for payments to be made when LungFit – used for the treatment of hypoxic respiratory failure – was approved by the US Food and Drug Administration.

That approval has now been received, so Circassia is due $2.5million within 60 days of the approval, $3.5million within 60 days of the first anniversary and $4.5million within 60 days of the second anniversary.

In addition, Circassia is entitled to a royalty of 5 per cent of net sales of the device, starting on the second anniversary of approval, up to a maximum of $6million.

Circassia was up 17 per cent on the week to 34p.

AIM’s All-Share index did less well. Reflecting jitters among small cap investors over what a UK recession might hold it was down 2.7 per cent over the past five days compared to a 1.1 per cent fall by the FTSE All Share.

Among the AIM fallers, Oxford BioDynamics dropped by more than a fifth on Tuesday, before recovering, after warning it might need further funding.

The biotech company – which has just launched its flagship EpiSwitch CiRT product in the UK and US – saw half-year revenues fall from £250,000 to £90,000 and its operating losses rise from £3.5million to £4.1million.

SIMEC Atlantis Energy also nosedived, losing 40 per cent with its shares down to 1.2p after it unveiled heavy losses.

The tidal power group was £19.4million in the red in 2020 but last year that jumped to £74.1million.

The increase came as a result of the recognition of £32million of impairment losses at the Uskmouth power station following the decision in April 2022 not to proceed with its conversion to waste fuel.

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