Does the price action justify the narrative in a share? Ironically that makes the narrative less compelling, but people don’t know it at the time!
I take a look at Reabold Resources & Union Jack Oil who both hold a stake in the biggest UK land drill this decade, yes if this delivers, you are looking at multiples, this would be material on a discovery to all companies involved.
No agenda, no buy or sell in this blog, it is up to you to decide if you think what you are reading is interesting, do your own due diligence, which companies involved rock your boat, but the one thing l would say, nothing is priced in today SP for both companies on any future news.
As l said in the opening sentence, the narrative is not less compelling because of no price action to date, yet l expect that to change leading up to the first gas numbers being released.
Reabold Resources (RBD) Share Price 0.675
Union Jack (UJO) Share Price 0.0925
Licence PEDL 183 contains the significant West Newton A-1 gas discovery. The Discovery well was originally drilled a couple of years ago by Rathlin Energy UK, testing gas out of the Permian at four and a half million (419 Bcf), a sizable structure would be an understatement.
With a COS rate of 72% in the first zone and the word “Appraisal” rolls the dice in favour of the operator and companies involved.
Before we go on, people ask what the true COS is (Chance Of Success), well here is the sources of information l am using as reference points.
Reabold Resources (RBD) RNS Monday 03 December 2018 The well will test two targets; the first target is the Kirkham Abbey Formation gas discovery which has an estimated 72 per cent chance of success and an NPV of $247m* (*Connaught Management estimate. Note: This estimate is based on the economic evaluations and most recent price forecasts provided by Deloitte LLP for the CPR, updated by Connaught)
The West Newton A-2 appraisal well, targeting the Kirkham Abbey Shoal and Cadeby Reef formations for gas and oil respectively was spudded at 01:45 on 26 April 2019. The West Newton A-2 appraisal well will be drilled to a total depth (“TD”) of approximately 2,061 metres below ground level and is expected to take circa 40 days to reach TD.
The best estimate Contingent Resource of 189 billion cubic feet of gas equivalent within the Kirkham Abbey Shoal formation.
If that was to come in as proposed, that would make it the biggest gas field onshore in the UK.
Don’t forget in addition, there is considerable upside potential from the lower, Cadeby Reef formation, oil exploration target underlying the gas reservoir, with a gross Best Estimate Prospective Resource of 79.1 million barrels of oil equivalent.
You could be looking at an offshore discovery onshore with pipelines, gas terminals already in place, cheap production costs with the possibility of being a company game changer.
John Hodgins (Rathlin Energy (UK) & David Bramhill, Union Jack Oil PLC
2017, Deloitte prepared a CPR incorporating published both the data from the West Newton discovery well and subsequently acquired 3D seismic data over the field. The Deloitte CPR assigns Contingent Resource to the Kirkham Abbey gas formation and is the source of management volumetric assessments.
Conclusion, you are witnessing the biggest drill in the UK today, potentially not just a game changer for investors or the companies involved, gas is a precious commodity. We know the markets like oil rather than gas, but the UK needs gas and here we have potentially a possibility of delivering LPG directly into the national grid.
Do your own research and good luck @ABMckinley
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