Rathlin Energy does not have enough money to meet its drilling and abandonment commitments in East Yorkshire, according to annual accounts published today.

The company said it was looking for new funders and may seek to delay more of its obligations.

But no binding agreements on funding are in place, the accounts said, and there was a “material uncertainty which may cast significant doubt on the Company’s ability to continue as a going concern”.

The accounts for the year to December 2023 said:

“the Company may be unable to realize its assets and discharge its liabilities in the normal course of business”.

Rathlin Energy is the operator of PEDL183, covering the area of Holderness inland from the east coast, north of Hull.

The company failed to meet its commitments to drill and test a new deviated or horizontal appraisal well at the West Newton field in PEDL183 by June 2024.

It also missed the same deadline to recomplete or sidetrack and test one of three existing wells at West Newton.

After the accounts were signed off on 27 May 2024, the industry regulator, the North Sea Transition Authority (NSTA), allowed Rathlin to delay drilling the new well until June 2027 and delay recompleting an existing wellbore to June 2026.

The existing wells at West Newton (WNA-1, WNA-2, WNB-1/WNB-1z) were due to be plugged and abandoned by 16 December 2024, the accounts said. But they said Rathlin also expected to seek a delay to this operation.

Earlier this year, we reported on Rathlin Energy’s history of delays and changing plans at West Newton. Today, the company gave details of its plans to stimulate  the West Newton-A2 well but gave no timescale for the operation.

The accounts report that Rathlin Energy had a working capital balance at 31 December 2023 of £2.2m. This was “sufficient to maintain operations until third quarter of 2025”, the accounts said.

But Rathlin said it did not have enough to cover its share of the anticipated £10.7m costs of drilling, completion and abandonment obligations. The accounts said:  

“If the Company cannot find an acceptable financing solution, the Company may be forced to enter into an arrangement that would significantly dilute the Company’s interest in PEDL183.”

Rathlin said its largest shareholder had said it “could provide additional funding if necessary”.

Rathlin also said it was considering cost reductions, reducing its working interest through a farm-out and what it described as “other commercial options”.

The accounts said the board believed a financial solution was likely, but “there are no binding agreements in place for funding”.

Neither Rathlin Energy, nor its partners in PEDL183, have announced changes to funding for PEDL183 operations since the sign-off the accounts.

Key figures

All figures are for the accounts to the year ending December 2023

Net loss: £851,286 (2022: £1,033,750)

Cash at year end: £2,378,151 (2022: £3,774,299)

Working capital balance at year end: £2.2m

Admin expenses: £851,286 (2022: £1,033,750)

Total assets: £23,632,567 (2022: £24,769,964)

Total liabilities: £1,709,898 (2022: £2,072,338)

Wages and salaries: £218,558 (2022: £220,602)

Fees paid to Stephen Williams: £36,000 (2022: £36,000)

Unrealised tax losses (which can be recovered against future tax profits): £5,106,044

Restricted cash (bank guarantees to landowner who leases  sites): £150,000 (2022: £150,000)

Decommissioning obligations: £1,498,614 (2022: £1,460,864)

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