Reabold Resources upbeat on oil-based drilling approval

Oil and gas investor Reabold Resources has received approval from the Environmental Agency (EA) to use oil-based drilling fluids at the West Newton B-2 well, it announced on Wednesday.

The AIM-traded company said the variation issued by the EA specifically permits the use of oil-based fluids within the Permian formations during drilling and testing stages.

It had already set plans for a horizontal well at the West Newton B site, targeting a start in the first half of 2024.

Key preparatory steps had been taken, with the well path selected, the engineered design finalised, wellbore casing acquired, and the operator Rathlin Energy UK reaching out to drilling rig and other pivotal service contractors to confirm availability.

A report from 29 September last year showed that West Newton held a promising gross 2C unrisked technically recoverable resource of 197.6 billion cubic feet of sales gas.

That projection was coupled with an estimated 86% geological success rate.

As for the financials and stakes involved, Reabold Resources had a significant investment in the project, with a 56% economic interest in West Newton and PEDL183 through its roughly 59% ownership in Rathlin.

Rathlin holds a 66.67% stake in PEDL183, and Reabold also directly owns 16.665% of the PEDL183 licence.

On the funding front, Reabold said it had the necessary capital for its share of the upcoming drilling on the licence.

Additionally, it expressed its commitment to helping Rathlin find funding solutions for the 2024 drilling.

That support could be bolstered by the anticipated second tranche payment from Shell relating to the sale of the Victory asset.

“We are delighted to receive approval from the EA for the West Newton B site,” said co-chief executive officer Sachin Oza.

“Our studies have clearly demonstrated that the use of oil-based drilling mud will be a key factor in enhancing flow rates from wells in this field, and therefore, this is an important step for the drilling of the B-2 horizontal well next year.

“West Newton is potentially one of the largest hydrocarbon fields discovered onshore UK, and we remain focused on developing and unlocking the significant resource potential of this asset.”

At 0841 BST, shares in Reabold Resources were up 0.22% at 0.09p.

Reporting by Josh White for Sharecast.com.