Nu-Oil & Gas plc (LON:NUOG) has announced that operations on onshore petroleum lease PL2002-01(A) in western Newfoundland, Canada, started after receiving government approval for the first phase of the work programme.
Shares jumped 44.44% to 0.52 in late morning trading.
The first phase of the project involves a wireline operation to clean up the PAP#1-ST#3 well and mill-out a physical obstruction that is believed to have been restricting flow.
The well will then be flowed for between 15 and 30 days to allow for analysis and evaluation of production.
PVF Energy Services is providing the financing for the project and in turn Nu-Oil will share net revenue from production of the lease on a 50/50 basis after paying back costs. PVF has the right to drill new wells on the lease under a production sharing agreement. Nu-Oil and PVF expect to conclude a farm in agreement to cover this in the "near future".
Nu-Oil chief executive, Nigel Burton, said: "The company is delighted that the workover programme at PL2002-01(A) has commenced on schedule. This new activity and investment at the Garden Hill Field is expected to lead to production being reinstated."
The PL2002-01(A) lease contains the Garden Hill Field Trend, a proven hydrocarbon bearing accumulation beneath the Port‐au‐Port peninsula in Western Newfoundland. Based on internal reservoir models, it is estimated to contain between 83 and 341mln barrels of oil (mmbo), increasing to between 136 and 591mmbo when including the mapped offshore extent.