Shares in Nautical Petroleum were sent soaring nearly 40% yesterday after it said it had found a substantial column of oil in a sidetrack well drilled on the Kraken field.
The British oil explorer said the additional well, drilled to the west of the original discovery in block 9/2b in the central North Sea, had found two zones of good-quality oil with oil saturation of 90% and no oil/water contact.
Steve Jenkins, its chief executive, said: “This is a fantastic outcome for Nautical, which justifies our decision to complete the activity on a sole risk basis.
“The sidetrack has encountered a substantial oil column, which will result in the reclassification of significant oil volumes from prospective to contingent resources.
“Those volumes will now be assessed and incorporated into our planning for an enlarged Kraken development.”
Nautical, which owns a 35% equity interest in the block, said earlier this month the sidetrack well was targeting resources of 114million barrels of oil. It said the sidetrack had encountered oil-bearing sands in two reservoirs, one with a true vertical net oil pay of 42 feet and the other net pay of 35 feet.
Shares in Nautical Petroleum, which have climbed sharply from a 52-week low of 44p on the back of significant discoveries at Kraken and Catcher, added a further 38.4% to 308p yesterday, after hitting 349.75p in early trading.
David Barclay, of investment manager and financial-planning specialist Brewin Dolphin in Aberdeen, noted that with Nautical shares trading at 49.5p at the turn of the year, yesterday’s price rise had resulted in shareholders participating in an increase in market capitalisation from about £43million to £268million in a little more than nine months.
Andrew Reid, Aberdeen-based managing director of energy consultant Douglas-Westwood, said: “This is another positive development for the UK continental shelf on the back of a series of good discoveries and supports what we always knew: that the UKCS is a world-class basin.
“What is encouraging here is that Nautical persisted with the sidetrack after joint-venture and operational issues. It seems that the rewards may be high for their efforts as initial reports are of a high-quality reservoir with strong production potential, although no specific details have been released yet.”