Reabold's West Newton well positioned to contribute towards UK's energy security

Highlights

• Reabold’s West Newton Project is one of the major onshore hydrocarbon discoveries since 1973.
• RBD recently shared its updated Conceptual Development Plan for the West Newton Project.
• Reabold expects the West Newton project to start production as early as 2025.

Reabold Resources PLC (LON:RBD), upstream oil and gas investment firm, recently shared the conceptual development plan for its West Newton Project. The project is located north of Hull, England and was discovered in 2014. West Newton holds an estimated 35Mboe of recoverable hydrocarbons with a sales gas component of 203bcf.

Reabold has several hydrocarbon projects in its portfolio. The company’s strategy is to provide capital to advance a low cost work programme to mature assets to the point of monetization thereby generating significant returns in project value over a short period of time.

The West Newton Project sits in licence PEDL183, operated by Rathlin Energy (66.7%) in a joint venture with Reabold (16.7%) and Union Jack Oil PLC (16.7%). Also, Reabold owns a 59.5% stake in Rathlin Energy, taking its economic interest in the project to 56.3%.

How West Newton could contribute to UK’s energy basket

The UK is known to import oil and gas to meet its energy needs. Over half of the country’s natural gas requirements is met by imports. Norway supplies around 55% of the country’s gas imports, while the rest is imported in the form of LNG from Qatar, Russia, and the US.

Studies estimate that by 2030, the UK’s dependence on gas imports is set to rocket to 70% to meet its energy needs. The global supply chain is posing new risks due to geopolitical situations. Given this backdrop, domestic supply will play a crucial role in the energy security of the UK.

The data from the Department of Business, Energy and Industrial Strategy shows that in 2020, the UK consumed 41.6Mtoe of natural gas and 46.6Mt of crude oil. It must be noted that 2020 was the year when energy consumption was relatively lower due to the pandemic as economic activities were limited.

The UK may cease its imports from Russia in the near future and will rely heavily on imports from the US, Qatar and Norway. Securing domestic supply will likely become a key strategic national imperative going forward.

Reabold estimates West Newton to commence production as early as 2025 with a plateau production rate of ~44Mcfd. As per the modelled peak production data, the project is estimated to produce a multiple of the current onshore gas-production in the UK. It has existing oil and gas infrastructure, which will ensure smooth integration of natural gas production from the field to the gas grids.

Additional developments of potential prospects in the Greater West Newton area are also possible which can boost the project’s production further.

Reabold has included eight wells in its gas development concept. The project has recoverable hydrocarbon volumes of 35 Mboe and a sales gas component of 203 billion cubic feet(bcf). Also, the economic modelling of the project has calculated a strong internal rate of return or IRR of 87% with  a substantial gross pre-tax NPV₁₀ of US$448 million. The company has charted out the forward plan, reflecting its confidence in the project and value realisation potential.