Image Source: Company update, 27 May 2022)
- West Newton asset is potentially the largest hydrocarbon discovery in the UK’s onshore since 1973.
- West Newton is estimated to hold a recoverable hydrocarbon resource of 35 Mboe.
- Reabold holds a 59.5% interest in Rathlin Energy, operator of the West Newton Project.
- The Company estimates the first gas production in 1H 2025 from West Newton.
Oil and gas investing company Reabold Resources PLC (LON:RBD) today updated the market on the conceptual development plan for the onshore West Newton Project. This move is in line with RBD’s commitment to progress its oil and gas asset in the United Kingdom.
West Newton is an onshore hydrocarbon asset located north of Hull, England, which is contained within the petroleum exploration and development licence (“PEDL”) 183. The licence is operated in a joint venture (JV) with Rathlin Energy, the designated operator of the licence, owning 66.7% in PEDL 183.
Reabold owns a majority stake of 59.5% stake in Rathlin Energy and further owns 16.7% interest directly in the licence, resulting in 56.3% economic interest in the licence for RBD.
Reabold made its first investment of GBP 3 million in Rathlin back in 2018 to own a 37% equity stake in the company. Subsequently, RBD made further investments into the project and Rathlin to increase its economic interest to 56.3%.
West Newton Project
West Newton Project location with existing infrastructure (Image source: Company update, 21 June 2022)
West Newton was discovered in 2014 with initial well A-1. The JV partners drilled two more appraisal wells, A-2 and B-1z, during the period 2019-21, which established the hydrocarbon resources in the project and confirmed that West Newton is a major onshore oil and gas field in the UK.
Reabold estimates the project to hold a sales gas component of 203 bcf with a total recoverable hydrocarbon of 35 Mboe, making it potentially the largest hydrocarbon discovery in UK’s onshore since 1973.
The modelled peak production data forecasted that the project has the potential to produce a multiple of the current onshore gas-production in the UK.
Conceptual Development Plan
Three wells- A-1, A-2 and B-1z, drilled so far on the project have all intersected a significant hydrocarbon column in the Kirkham Abbey Formation. Furthermore, these wells, along with the 3D seismic data, have confirmed a significant aeral extent of the field.
These initial wells were drilled vertically, and in the future, horizontal wells will be drilled for getting maximum exposure to the reservoir thereby enhancing well productivity.
The development plan envisages eight new wells for optimum production from the project. The wells A-2 and B-1z confirmed the resource potential with hydrocarbons recovered to the surface. RBD estimates that the reservoir either contains light oil with high gas to oil ratio (GOR) or natural gas with associated hydrocarbon liquids.
The first development well to be drilled will be B-2, which will underpin the development plan. B2 well is scheduled to commence drilling during 1H of 2023.
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The project is expected to generate strong cash flow for multiple years. RBD estimates the Gross NPV10 of US$ 448 million (pre-tax) with an internal rate of return (IRR) of 87%. The total pre-production capex is estimated to be US$139 million, while the additional wells will be drilled using the cash generated from the hydrocarbon sale.
The project is forecasted to generate a cumulative cash flow of US$1.3 billion.
Image source: Company update, 21 June 2022
RBD’s development plan for West Newton revolves around eight well gas and associated liquids production. The Company has commenced the planning and permitting for future operations. The development plan reflects the company’s confidence in the project and value realisation potential.
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