Union Jack Oil working towards restart of testing at West Newton A-2

Union Jack Oil updated the market on the extended well test at the West Newton A-2 appraisal discovery well in East Yorkshire, within PEDL183, on Wednesday.

The AIM-traded firm noted the temporary suspension of completion and the extended well test operations on the Kirkham Abbey formation in the West Newton A-2 well in August.

It said that, during the early stages of completion and testing, it became apparent that the Kirkham Abbey formation - which was previously expected to be primarily a major gas discovery - was a reservoir containing a 20 metre gas column, overlying a 45 metre liquid hydrocarbon column.

The approved testing programme for the West Newton A-2 appraisal discovery well had originally been designed to test a gas column.

Gas flow to surface was achieved, and was flared during operations, but due to the equipment availability at the time, reservoir fluids were not recovered.

The oil zone, therefore, was not fully evaluated during the initial phase of testing.

Union Jack said extended well testing was suspended so it could review and revise the well test design, to deliver and validate the onshore resource.

Pumping, surface separation, fluid storage tanks and other well testing equipment had now been sourced to undertake this work, the board confirmed, and regulatory approvals to restart the extended well test were currently being sought.

Once regulatory approvals are received, the company said the equipment would be mobilised to site at the earliest opportunity, and the test would re-commence.

The programme would include pulling the existing completion assembly from the well, running a new tubing and pumping bottom hole assembly and the installation of a pumping wellhead.

Those operations would be followed by the running-in of the pump and well rods, and the installation of a surface pumping unit.

The board said the well would then be pumped to recover load fluid, directing all recovery through the test unit and incinerator.

It said the well would be monitored for inflow and, following the extended well test, would be shut in and suspended.

The cost of this additional work was already covered by an earlier cash call, of which Union Jack had already paid for its share, with the estimated costs said to “fit well” within the original test well budget.

Statutory planning permissions are in place to drill two additional wells - the West Newton B-1 and B-2, the board confirmed.

The locations of these wells are considered to be optimal to test the Kirkham Abbey formation, and would also test the possible presence of the Cadeby formation, which it described as a further, highly important and high value target.

Union Jack, following a recent successful placing of £5m, said it was “more than adequately” funded for the cost of future drilling operations and any other project related works and general and administrative costs, including 3D seismic acquisition over other potential prospects within PEDL183.

Following the completion of the extended well test, ongoing costs would not be subject to any promote, and all costs would be at a percentage holding equivalent.

“We are pleased to report the progress that has been made to understand better the significance of the West Newton discoveries, to plan the resumption of the A-2 EWT and design of the drilling programme for 2020 following extensive and painstaking technical work executed by both Rathlin and Union Jack`s technical teams,” said executive chairman David Bramhill.

“Although highlighted in an RNS previously, what had become apparent is the materiality of the size and scale of the liquid and gas volumes in place at West Newton, which we believe are unique to UK onshore and more representative of offshore North Sea discoveries.

“West Newton remains one of Union Jack's flagship projects which will be evaluated in further detail during 2020.”

Bramhill said that in addition to West Newton, the company was also looking to progress work on its other advanced projects in 2020, including first production from the development at Wressle, subject to a favourable decision from the Planning Inspectorate; progressing the ongoing studies and appraisal of what it considered to be a material resource at Biscathorpe; and making meaningful technical and corporate progress at two other projects - namely, the producing Keddington oil field which it considered to hold untapped value, and at the drill-ready North Kelsey Prospect, where the firm also had high expectations.

“There is still work to be done, however, the board is confident it has excellent, value accretive projects, whose contribution will become apparent during 2020 for which we are fully funded and we look forward to reporting on our progress.”

At 0930 GMT, shares in Union Jack Oil were down 5.09% at 0.16p.