Malcy’s Blog – Oil price, Union Jack Oil, Reabold Resources & finally

WTI $41.01 +74c, Brent $44.15 +63c, Diff -$3.14 -11c, NG $2.10 +30c

By Malcolm Graham-Wood

Oil price

Like a metronome oil swings back and forward, this morning it has lost almost exactly what it gained yesterday so back to square one. True to form this afternoon it has regained all that loss. Economic news in the last couple of days has mainly been good for markets and equities also rose yesterday across the board.

Manufacturing and factory capacity grew and tightened with PMI no’s and US ISN data  confirming that and I suppose that the nfp numbers on Friday back to being important again.

Union Jack Oil/Reabold Resources

Rathlin, as operator of West Newton issued a positive update on operations and progress to date in respect of the near term drilling of the WNB-1 appraisal and subsequent testing of the well. It also covers the completion of the EWT at the WNA-2 discovery well is ‘expected to commence in the next few weeks’. A combined testing programme at both WNB-1 and WNA-2 wells is to follow the WNB-1 drilling.

The WNB-1 well has the dual objective of appraising the significant discovery made in the Kirkham Abbey formation, as well as evaluating the deeper and potentially substantial Cadeby prospect, in a more optimal location than was encountered at the WNA-2 well,whereas the WNA-2 well Evaluation of the WNA-2 open hole data identified an estimated gross hydrocarbon column of approximately 65 metres in the Kirkham Abbey formation.

Initial petrophysical evaluation identified a gross oil column of approximately 45 metres underlying a gross gas column of approximately 20 metres within that interval. In addition, the deeper Cadeby prospect offers considerable potential additional upside to the potential value of West Newton and the planned WNB-1 well will target this zone at an optimal position.

It is clear that a significant amount of work has been going on at West Newton with pre-construction activities including archaeological reporting, and with the mobilisation of the geotechnical rig to drill the initial 80 metres of the well bore anticipated within the next few weeks.

Commenting, David Bramhill, Executive Chairman of Union Jack, said:

“The drilling of the WNB-1 well is important for the West Newton project for appraisal of the Kirkham Abbey formation that was penetrated successfully in A-2 well as well as targeting the deeper and potentially significant Cadeby prospect.  We are delighted that the Operator has managed to make excellent progress with the B site operations despite the extreme challenges thrown up by events since March 2020.  Subsequent to drilling WNB-1, we look forward to carrying out testing at both WNA-2 and WNB-1′.

Stephen Williams, co-CEO of Reabold, commented:

 “The B-1 well is a crucial well for Reabold’s West Newton project, for both the Kirkham Abbey and Cadeby formations.  We are delighted that the Rathlin team has managed to push ahead with the B site operations despite the extreme challenges thrown up by events since March this year. 

 “With our economic interest in the licence now over 50 per cent., we are extremely excited by the potential of the West Newton project, particularly during a period of weaker commodity prices. In addition to its significant size, the reduced development costs associated with an onshore project can lead to economics that are highly favourable compared to alternatives, leading to a project that is highly valuable from an industry perspective.”

I have to say that I am extremely surprised that this excellent news from West Newton has not seen a rise in both these companies share prices today. Whilst I do not always put in the technical numbers it is worth noting the following;

The Operator provided updated volumetric estimates for the Kirkham Abbey formation post drilling that were contained in an RNS on 11 November 2019:

Base Case:      – Liquids: 146.4 million barrels (“mmbbl”) of oil initially in-place (“OIIP”)

                          – Gas: 211.5 bcf of gas initially in-place (“GIIP”)

Upside Case:   – Liquids: 283 mmbbl OIIP

                           – Gas: 265.9 bcf GII

Given that both companies are in a position where the West Newton programme is fully funded for their planned drilling and testing activities I would suggest that there is nothing whatsoever in the share prices for this and yet particularly for UJO, significant upside over the coming weeks and months.

And finally…

Tonight sees the most valuable game of football in the English game, the Championship play-off between the Cottagers and the Bees is said to be worth in excess of £100m…

The final ODI between England and Ireland is under way, England were inserted and are currently 119-3 but are 2-0 up in the three match series.

Malcolm Graham-Wood

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Disclaimer: Malcy’s Blog is provided for general information about the international oil and gas industry and the companies that operate within it. It does not constitute investment advice and Malcy does not buy or sell shares, warrants or bonds in any company written about within the blog. Information is taken from publicly available sources and any comment is that of the author who does not take any third party comment in the publication.

(The opinions expressed here are those of the author, a columnist for Share Talk.)

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