Rathlin Energy will fail to meet its obligations to drill a production well at West Newton in East Yorkshire because it can’t find the money, it was revealed today.

The company made a commitment to the industry regulator, the North Sea Transition Authority (NSTA), that it would drill and test the new well by June 2024.

It also agreed to recomplete or sidetrack one of the existing exploration wells at West Newton and test it by the same date.

But a partner in the project, Reabold Resources, said today:

“As a result of Rathlin’s funding shortfall, drilling of the first development well will not be completed prior to June 2024.

“Rathlin, as operator, has initiated discussions with NSTA to defer the deadlines for these commitments.”

Last year, Rathlin said it needed more money for the West Newton plans. It had been looking at a possible farmout or further investment from Reabold, its majority shareholder. The committed work had been estimated at about £9m.

The Reabold chairman, Jeremy Edelman, writing in the company accounts, said:

“Rathlin, the site operator, was unable to resolve funding for its own share in 2023, which we believe is a consequence of the fiscal and political instability in the UK.”

He said Reabold looked forward to the “resolution of Rathlin’s funding situation in 2024 through a potential farm-out arrangement or other sources of capital”.

He added that the Reabold board remained confident about the prospects for West Newton.

Reabold recently received £10m from the sale of Corallian Energy to Shell. Reabold’s co-chief executives, Sachin Oza and Stephen Williams, said they “could potentially” invest more money in the new West Newton well, in addition to their share of the costs.

Before today’s announcement, a new well at the West Newton-B site had already been delayed three times. There had previously been plans for an extra four wells at the nearby West Newton-A site.

But in February 2024, we reported big changes to the West Newton project. The partners announced proposals to drill a single new well at West Newton-A by the end of 2024.

Shares in Reabold Resources fell 11.25% during today but recovered slightly to close down 6.25% at 0.075p.

Reabold accounts

Key figures

Operating loss for the year: £7.2 million (2022: £45,000)

Onshore loss on ordinary activities: £0.55m (2022: 0.74m)

Exploration expenses: £1.6m (2022: £74,000)

Admin expenses: £2.2m (2022: £1.7m)

Exploration and evaluation assets: £7.0m (2022: £6.8m)

Total liabilities: £983,000 (2022:676,000)

Net cash used in operating activities: £2.16m (£1.78m)

Chief executives’ salaries: Sachin Oza and Stephen Williams were each paid £242,627 (up 5% from 1 January 2023) plus bonuses of £51,575 each

Investment in Rathlin Energy at 1 January 2023: £17.6m

Surety bonds for restoration of West Newton sites: £25,000

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Comment from Jon Mager

It would be fascinating to see a timeline from the beginning of the Rathlin project at West Newton against the backdrop of the nonsense about the need for onshore gas, at first, and now oil for crucial national energy security. How many times have Rathlin changed track and broken promises.
Fat salaries for the chancers and cowboys. Devastation for a quiet corner of England and nothing produced or impact on energy prices .over 20 years.