Several junior oil and gas firms enjoyed a lift this morning on the news that Wick and Colter – two highly-anticipated offshore UK wells – have been cleared for drilling by a critical British regulatory authority. Corallian Energy, operator of the prospects, said the Offshore Petroleum Regulator for Environment and Decommissioning has advised the Oil and Gas Authority that it has consented in-principle for the drilling.
Although several regulatory hurdles remain in place, Corallian said it expects to complete the wells as a back-to-back programme later this year using a Jack-Up rig. It hopes to begin in December with Wick, which is an exploration prospect with estimated mean prospective resources of 26MMboe based in the Moray Firth.
Once Wick has completed, the rig will move to the English Channel to drill a well at Colter that will appraise the 98/11-3 oil discovery. This prospect contains an estimated mean prospective resource of 23MMboe and is located in a structure adjacent to Wytch Farm, Europe’s largest onshore oil field.
Reabold Resources (LSE:RBD), which owns a 32.9pc stake in Corallian – which in turns owns 40pc of Wick and 49pc of Colter and is responsible for funding a portion of both projects – rose 4.3pc to 0.8p on the news.
Stephen Williams, co-chief executive of the business, said: ‘We are very pleased to report this approval from OPRED, signalling impending activity at both Wick and Colter. Both prospects carry highly attractive economics with low development costs and fast payback in the event of success. Our investment in Corallian has given us significant exposure to both projects as well as additional opportunities within the Corallian asset base.’
Meanwhile, Baron Oil (LSE:BOIL), which owns a 15pc interest in Wick and a 5pc position in Colter rose 2pc to 0.5p, with chairman and chief executive Malcolm Butler adding:
‘While there are still further approvals to be obtained before drilling can commence, the decision by OPRED represents an encouraging milestone towards meeting our revised timetable to drill Wick in December 2018, followed immediately by Colter.’
Elsewhere, Upland Resources (LSE:UPL), which owns a position in Wick, jumped to 3.4p while United Oil & Gas (LSE:UOG) and Andalas Energy (LSE:ADL), which own stakes in Colter, rose to 4.6p and 1p respectively. Andalas boss Simon Gorringe added:
‘We are pleased with the continued progress of the operator towards the commencement of the proposed well, which follows today’s announcement and the recent announcement of the contracting of the Ensco-72 rig to execute the Wick and Colter drilling programme. The drilling of the Colter well will expose Andalas shareholders to an exciting period of drilling activity, whilst we continue to work with our partners to complete the acquisition of Bunga Mas and to provide updates on the Badger licence. I look forward to keeping the market informed as we continue to progress our portfolio.’