Rathlin Energy, the company which runs oil and gas sites in East Yorkshire, is seeking extra funding to pay for drilling and testing obligations.

The company has committed to drill a new horizontal well within the next nine months at West Newton in Holderness. It has also agreed to recomplete or sidetrack and then test other wells in the field by the same deadline.

Rathlin revealed in company accounts published this week that it had £3.8m in cash but the work was likely to cost it about £9m.

The company said:

“Additional funds are required to fund the drilling and completion commitments before June 2024.

“The company is actively assessing funding alternatives to enable these development operations to continue.”

Rathlin said if equity funding were not available, it may consider “alternative solutions”.

The company said these could include cost reductions, debt financing, reducing its working interest via farm-out, deferral of work commitments or other commercial options.

At the date of approving the accounts, there were no formal agreements in place for funding, it said.

Rathlin operates one onshore licence in the UK, PEDL 183, with a stake of 66.67%. Other partners are Reabold Resources and Union Jack Oil (both 16.665%).

Reabold also has a direct 59% interest in Rathlin. The other major investor is the Canadian company, Connaught Oil & Gas Ltd (20%).

Rathlin said the horizontal well would be drilled at the West Newton-B site in Holderness. The partners have agreed the location and orientation of the well. it said.

The other work would either be carried out at West Newton-B (WNB-1z well), or at the neighbouring West Newton-A site (WNA-1 or WNA-2).

Rathlin said 1,500m horizontal wells were “the preferred development drilling method” for West Newton. The wells had a greater likelihood of encountering sweet spots and sections of the reservoir with natural fractures, the company said.

It said these methods had been used in similar fields in Europe, particularly in the northeast Netherlands.

The accounts revealed an annual loss before taxation of £1.03m for 2022. The company spent £0.38m on what was described as “administrative costs related to acquisition, exploration and development of petroleum and natural gas properties”.

Key figures for year ending December 2022

Cash balance: £3.8 million (2021: £5.3m)

Loss on ordinary activities before taxation: £1.034m (2021: £1.18m)

Expenses for management services: £0.978m (2021: £0.956m)

Debt: zero

Total assets: £24.769m (2021: £25.736m)

Total liabilities: £2.072m (£2.264m)

Tax losses carried forward: £5.355m (2021: £7.412m)

Tax credit received in 2022: £0.290m

Salaries, fees and pensions: £0.378m (2021: 0.536m)

Decommissioning estimates: increased by £85,556 (2021 increased by £17,005)

Impairment: No impairment recognised for 2021 or 2022