Several UK oil and gas juniors faced a drubbing on Friday morning following the news that a side-track well at the much-anticipated Colter prospect in the UK’s Wessex Basin has been plugged and abandoned. Colter’s operator Corallian Energy revealed that well 98/11a-6Z encountered the top of the target Sherwood Sandstone reservoir but did not penetrate the predicted fault bounding the target Colter prospect.
The news comes after Corallian revealed that its first well, 98/11a-6, had been drilled to 1,870m in the prospect’s Sherwood Sandstone but unexpectedly remained on the southern side of Colter’s bounding fault. The well ending up making a ‘bonus’ oil discovery at the Colter South prospect after encountering oil and gas shows over a 9.4m interval at the top of the reservoir. Petrophysical evaluation of drilling data calculated a net pay of 3m, similar to a well drilled in 1983 by British Gas in the Colter South fault terrace.
As such, Corallian believes that the two wells may share a share a common oil-water-contact, having both intersected the down-dip margin of the Colter South prospect. The company’s most recent assessment of Colter South had estimated a mean recoverable volume of 15MMbbls. However, it said further work will be required to refine this assessment with the new well data.
The business immediately set about sidetracking the well with 98/11A/6Z to assess the primary Sherwood Sandstone target on the northern side of the bounding fault. However, following completion on Friday, it said initial evaluation from both wells suggests that the total Colter prospect is smaller than pre-drill estimates indicated.
Regardless, it will continue to evaluate Colter South further as further work has already found that it is more extensive than pre-drill mapping suggested. What’s more, it said that the side-track encountered oil and gas shows in the Jurassic Cornbrash-Lower Oxfordian interval. Corallian believes these could provide an attractive potential target on trend to the west within the onshore licences held by the joint venture.
Colter was targeting an estimated mean prospective resource of 23MMboe located in a structure adjacent to Wytch Farm, Europe’s largest onshore oil field. Unsurprisingly, the news that this figure may, in reality, be much smaller was met with a less-than-enthusiastic response by investors in the several listed firms that have a position in Colter.
The most dramatic decline came from Andalas Energy and Power (LSE:ADL), which holds an 8pc stake in the asset. As at writing, the company was down 57.9pc to 0.2p. This will no doubt comes as a massive blow to those investors who took part in the company’s £1m placing at 0.45p a share at the end of last month.
Regardless, chief executive Simon Gorringe tried his best to put a positive spin on the situation, highlighting Colter South’s prospectivity.
‘The Colter appraisal programme has delivered a larger than expected Colter South prospect and significantly increased our understanding of the broader Colter prospect,’ he said in a statement. ‘The results of the sidetrack does, however, indicate that overall the Colter prospect is smaller than initially expected, but the results from the drilling of the sidetrack did deliver encouragement for our adjacent onshore prospects from the good shows encountered in the Middle Jurassic.’
Baron Oil (LSE:BOIL), which owns 8pc of Colter, also faced a steep decline, moving down 53.5pc to 0.2p as at writing.
Chairman and chief executive Malcolm Butler added: ‘While the drilling campaign indicates that the Colter Prospect is smaller than expected, it has demonstrated that the Colter South Prospect is larger than initially thought and has also given encouragement for our adjacent onshore prospects by encountering good shows in the Middle Jurassic. We will now integrate the results of drilling into the seismic data and evaluate the way forward to commercialisation of the Colter Prospect and the enlarged Colter South Prospect.’
Elsewhere, 10pc owner United Oil & Gas (LSE:UOG) was less severely hit by the news, dropping 15.5pc to 3.6p. Finally, Reabold Resources (LSE:RBD) which owns 49pc of Corallian Energy to give it a 16.1pc effective stake in Colter, sank 9.1pc to 0.6p in morning trading.
Co-chief executive Sachin Oza said: ‘We were delighted to make an oil discovery with the Colter well, and with the sidetrack effectively giving us two wells worth of data, the operator is now in a position to undertake the necessary work to determine the optimum forward plan. This offsets the disappointment around the lack of commerciality within the northern Colter fault terrace.’