0.88p22 Jan 2021 18:29
Union Jack Oil* (UJO LN), STRONG BUY, TP: 0.88p: Positive screening opinion received at West Newton
Share Price: 0.19p, Market Cap: £37.3m
•In a further encouraging update with regards to the Company’s flagship West Newton Project, Union Jack has drawn the market’s attention to Rathlin Energy’s positive planning update to local residents and the West Newton Community Liaison Group.
•Rathlin has received a Screening Opinion from the East Riding of Yorkshire Council in response to the Company’s screening request for the proposed West Newton A site extension.
•The proposed extension of the existing West Newton A (WNA) wellsite and associated work programme would provide for testing, appraisal and production from the two existing wells (WN-A1 and WN-A2) and the potential for drilling, testing, appraisal and production from up to six new wells on the WNA site over a 25 year period.
•The East Riding of Yorkshire Council`s Screening Opinion considers that the proposed development would not comprise EIA (Environmental Impact Assessment) development.
•Rathlin will be undertaking public consultation on the West Newton A site development plan over the coming months and ahead of the submission of any formal planning application.
•Information regarding the screening request is available on the East Riding of Yorkshire Council’s planning portal.
•Following December’s successful drilling results, the Company and its partners have turned their attention to an Extended Well Test (EWT) of both the WNB1Z and WNA-2 appraisal wells.
•There remains an extensive number of technical studies to be carried out to complete analysis of the WNB1Z well data, including correlation of the A-1, A-2 and B1Z well results and updated resource volumetric estimates, all of which will have a bearing on the planning and timing of the testing programme which is the next important milestone in determining the development potential of the West Newton project.
•In addition, the Joint Venture is considering a 3D seismic programme over other structures which have been highlighted within the licence area.
•As such, the short to medium term will focus on maturing this play further to commercialisation in addition to proving up analogue fields across the project area.
Our take: The positive screening opinion at West Newton should not be underestimated in our view. We also note that the opinion covers up to six wells on the West Newton A site only suggesting that the JV partners determine that this site alone has the required potential for full field development. Given the significant recent drilling results at the West Newton B site reported in December which the well encountered a gross hydrocarbon saturated interval in the Kirkham Abbey formation indicating a substantial hydrocarbon accumulation, we would expect full development to be an order of magnitude larger than indicated in today’s update. Indeed, the preliminary success at the A-2 well and further validation of WNB1Z sugge
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