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Shares in Reabold Resources PLC and Union Jack Oil PLC slumped on Friday after an update on the West Newton Field concluded that the formation was ‘very sensitive to aqueous fluids’.
Reabold shares were trading 13% lower at 0.28 pence each, while Union Jack Oil shares were down 3.3% at 29.50p following the update.
The update was published by Rathlin Energy Ltd, after consultation with the West Newton community liaison group. Reabold holds a 56% interest in the West Newton site through its 59% shareholding in Rathlin Energy. Union Jack holds a 17% interest in the site.
According to tests conducted on samples from the West Newton wells, previous drilling of the West Newton wells with water-based mud created wellbore damage in the Kirkham Abbey reservoir. The use of dilute water-based acids in drilling also would harm the ability of the reservoir to flow.
However, those tests demonstrate that by drilling with an oil-based drilling fluid, damage to the oil and gas reservoir can be reduced. Rathlin has applied to the UK Environment Agency for the use of oil-based drilling fluids.
Further analysis on the Kirkham Abbey reservoir indicates that it contains mainly gas. This means that the there is less need for the trucking of oil during production. Rathlin noted that this will ‘significantly reduce the volume of truck traffic’ and enable the installation of a pipeline to deliver gas directly to the national grid.
Commercial production from West Newton could start as early as 2026 provided regulatory approvals are secured and supply chain delays can be managed, the company said. It is anticipated that the recoverable gas resource will have the potential to meet the daily gas demands of over 380,000 homes in the UK for ‘many years to come’.
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