The Union Jack Oil PLC (LON: UJO) share price surged 10.9% after releasing the results of the model flow rate potential of its West Newton well after the successful completion of an Extended Well Test (EWT) program in H2 2021.
The results of the independent tests revealed that the well could produce up to 35.6 million cubic feet of gas per day and 5,000 barrels of oil from a horizontal well drilled in the gas zone. The estimate was derived from the data collected from the West Newton A-2 well.
The study results also indicated that the oil zone could generate up to 1,000 barrels of oil equivalent from a horizontal well, again based on data from the West Newton A-2 well.
An analysis of the hydrocarbons recovered from the well indicated that the fluids recovered had low viscosity, low specific gravity, and was a light oil with an API of between 45.9 to 49 degrees.
The gas recovered from the well also had a high heat content and was of excellent quality.
Investors cheered the excellent results that could make West Newton a significant revenue source for Union Jack Oil.
The review conducted by the RPS Group revealed that the wells at West Newton would produce the most oil and gas from horizontal wells compared to vertical wells.
However, the analysis left out a crucial aspect: the additional oil and gas that could be produced from the natural fracturing identified within the Kirkham Abbey reservoir.
UJO intends to conduct a further evaluation to explore the full potential of the West Newton well and determine the following work programme at the site.
David Bramhill, Union Jack’s Executive Chairman, commented: “We are encouraged by the RPS review, which continues to underline West Newton's potential as a material hydrocarbon producer. This initial analysis confirms the significance of the in-place resource and crucially, has de-risked the project by indicating the potential recovery of what we can now confirm to be high-quality light oil, in addition to good quality gas.”
“Ultimately, all of the analysis currently being undertaken is aimed at reducing risk and providing the Joint Venture with sufficient data to develop our forward plan for the next phase of activity at West Newton. Further work, including lab-based analysis of the core under reservoir conditions, is underway, which will further inform optimal future drilling and completion methods at West Newton.”
UJO shares seem pretty attractive at current prices, given that they have fallen 58.5% over the past year. However, they are currently up 9.79% since the year started.
*This is not investment advice. Always do your due diligence before making investment decisions.
UJO share price.
UJO shares surged 10.93% to trade at 15.53p, rising from Friday’s closing price of 14.00p.
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