Partners in a scheme to produce oil and gas in East Yorkshire have announced what appear to be big changes to their plans.

Union Jack Oil and Reabold Resources told investors this morning about proposals to drill a single new well at the West Newton-A site in Holderness by the end of 2024.

Previous announcements had suggested that drilling in the area would start at the nearby West Newton-B site, in the first half of this year.

Today’s statements said the new West Newton-A well would be directional. This, they said, would be cheaper than the previous plans for a horizontal well.

It would target gas in the Kirkham Abbey formation and a new area in the deeper Rotliegend Sandstone.

It said a feasibility study was now underway into a single well development and gas export plan for West Newton-A. If the new well were successful, gas would be processed and piped from the site to the national transmission system about 3.5km away.

Previous plans, approved by East Riding of Yorkshire Council nearly two years ago, were for four new wells targeting oil at West Newton-A and an expansion of the site from 0.9ha to 2.52ha.  Any oil, under those plans, would have been taken by tanker to a nearby refinery.

The statements said today the new well, to be called WN-A3, would be “twinned” with the first well drilled at the site, WN-A1. Twinning is where a new well is drilled close to an existing borehole that can’t be drilled or produced from because of problems, such as formation damage.

The WN-A1 well was spudded in June 2013 but damage to the Kirkham Abbey formation from acid cleaning prevented a valid production test. The well was shut-in and suspended. This well could also be re-entered to target the Rotliegend sandstone gas, the statement said.

The West Newton operator, Rathlin Energy, has agreed a commitment with the industry regulator to drill and test a new deviated or horizontal appraisal well by June 2024, according to the company’s most recent accounts. It must also recomplete or sidetrack and test one of the WNA-1, WNA-2 or WNB-1Z wells by the same date.

The West Newton-A site has planning permission for an additional four wells and 20 years of production. It also has formal consent from the Environment Agency for oil and gas production. But there is no permission for a new pipeline.

Today’s statements said other approvals needed for the new scheme were being “accelerated”.

One of the partners, Reabold Resources, said the plan was subject to Rathlin Energy “securing sufficient funding to drill and test the well”.

This evening, a Reabold presentation to investors said:

“Well drilling had been delayed due to funding shortfall at Rathlin.”

The presentation estimated it would cost more than £9m to get the well to production. This comprised £6.4m to drill the well and £3m to test it.

Reabold owns 59% of Rathlin Energy and has a separate 16.665% stake in the West Newton Licence. Reabold said there was an “active process underway to assess options to source funding for Rathlin’s share of the cost”. This included a farmout or further investment from Reabold, the company said.

Reabold recently sold the Victory gas project to Shell and said today it had £9.1m in cash from the sale. It described the revised drilling plan for West Newton-A as “cost-effective with a high chance of success” and said it could “potentially provide” further investment in Rathlin, “in addition to funding its own share”.

Stephen Williams, Reabold’s co-chief executive, said the new plan could see “production and cash flow much sooner than previously expected and with considerably reduced initial capital investment”. He said:

“We anticipate a funding solution for the drilling of WN-A3 being finalised in the near future, and this first development well being drilled this year.”

Union Jack Oil said commercial gas production could be “brought to market within months of a successful production test, resulting in a materially reduced capital investment which provides significant early cash flow”.

David Bramhill, executive chairman of Union Jack, described the drilling plan as viable and offering “significant cost savings”.

“The objective is to develop what we know to be a material onshore gas resource located in an area with excellent access to local and national infrastructure and an attractive domestic gas off-take market.”

• Stephen Williams is presenting at the Shares and AJ Bell Live investor evening in Edinburgh tonight from 5.55-8pm (27 February 2024).

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