Union Jack Oil PLC (AIM:UJO) will have another bite at a vast cherry, so says stockbroker SP Angel, which has repeated a ‘strong buy’ recommendation following an update from the West Newton project.
Testing operations are advancing at the West Newton B site where the British oil firm today said that a column of some 118 metres was demonstrated on completion of drilling.
A 44-metre section of the Kirkham Abbey formation was perforated in the West Newton B-1z well and hydrocarbons were produced to surface – as described by the company, good quality gas was recovered along with liquid hydrocarbons.
Executive chair David Bramhill in a statement said the Union Jack team is highly encouraged by the initial results, though not all findings were positive. It is also suspected that Kirkham Abbey formation is subject to near well bore formation damage which prevents optimum hydrocarbon flow. The company said it intends to carry out some form of remedial action.
SP Angel analyst Sam Wahab, in a note, added: “Whilst there will be an element of frustration at the suspected formation damage at the wellbore, this is a surmountable issue which can be rectified by penetrating a different area of what is a significant accumulation.
“Indeed, there are substantial hydrocarbons in place at West Newton and an active hydrocarbon system present, further evidenced by the return of hydrocarbons to surface at this ongoing and early-stage testing of the Kirkham Abbey formation.”
“Union Jack and its partners will now have another bite at this vast cherry, with well equipment currently being mobilised to the A-2 well site for the recommencement of testing.”