Union Jack Oil plc (LON:UJO, OTCQB: UJOGF) a UK and USA focused onshore hydrocarbon production and development company, notes today’s announcement from Reabold Resources plc in respect of the West Newton project contained within PEDL183.
The Announcement provides details of the West Newton Gas Export Feasibility Study conducted by CNG Services Ltd that was commissioned by Reabold. The Study has concluded that as a precursor to the intended West Newton full field development, an initial single well development and gas export plan could accelerate production and cash flow whilst requiring limited capital expenditure.
The Announcement also provides details of a revised work programme which has been approved by the North Sea Transition Authority.
The full text of Reabold’s announcement can be found below:
Reabold Resources plc, the investing company focussed on developing strategic gas projects for European energy security, has announced the results of the West Newton Gas Export Feasibility Study, conducted by independent energy consultants CNG Services Ltd. The Study has concluded that as a precursor to the intended West Newton full field development, an initial single well development and gas export plan could accelerate production and cash flow whilst requiring limited capital expenditure.
In addition, the North Sea Transition Authority has approved a revised work programme for PEDL 183 onshore UK, which contains the West Newton field.
The Feasibility Study:
· Confirms the technical and economic viability of a single well development plan, with:
o Initial gas production from a single horizontal well
o Gas processing through a modular plant, and
o Sales gas tied in from the West Newton A site to the National Transmission System at an existing above the ground installation via a 3.5 kilometre pipeline
· Concludes a single well development has excellent project economics benefitting from:
o Early cash flow with the ability to drill future development wells out of cash flow generated
o Low capex for the associated project infrastructure, estimated at ca. £12m, and
o An attractive NPV(10) of ca. £33m and an associated IRR of 29%
· First gas soon after drilling and completing a producer well, to be within 18 months from completion of drilling the next well at West Newton
Although the early production demonstrates highly attractive standalone economics, it is envisaged that it will be a precursor to the full field conceptual development plan as previously disclosed, which, under current conditions, has an associated pre-tax NPV(10) of ca. US$179m (approximately £140m), net to Reabold.
NSTA Approved Revised Minimum Required Work Programme for PEDL 183:
· Re-enter and recomplete or sidetrack one of the currently suspended wells on or before 30 June 2026
· Re-enter and recomplete or sidetrack one of the remaining suspended wells or drill and complete a new deviated or horizontal well on or before 30 June 2027, and
· Submit a field development plan on or before 30 June 2027
The joint venture (“JV”) partnership for PEDL 183 is likely to approve a forward plan, which will initially consist of the re-entry and recompletion of an existing West Newton well in order to establish sustained gas flow. The JV partnership believes this is a low risk and low cost approach to derisk the project and Reabold will update the market on the planned activity at West Newton.
The JV is fully funded for re-entry and recompletion and operational activity is anticipated to commence during 2024. Further updates will be provided in due course.
Reabold holds a ca. 56% economic interest in West Newton and PEDL 183 via its ca. 59.5% shareholding in Rathlin, which, in turn, has a 66.67% interest in PEDL 183. In addition, Reabold has a 16.665% direct licence interest in PEDL 183.
Sachin Oza, Co-CEO of Reabold, commented: “The CNG Feasibility Study highlights the opportunity to unlock significant near-term value from the West Newton project through the early production plan. The study confirms that the early production plan is both technically robust and economically attractive with a low capex requirement.
“This phased development plan allows gas production to be brought to market within months of drilling, generating significant early cash flow whilst we progress the full field development plan. With the industry currently suffering from a lack of available development capital, the ability to achieve early production with limited capex is strategically extremely valuable.
“With the necessary approval from the NSTA for the revised work programme for PEDL 183 secured, Reabold can continue to progress this important UK gas project in the most optimal manner.”
Union Jack Oil holds a 16.665% interest in PEDL183.
