Enegi resumes drilling at Canadian well

OIL exploration firm Enegi Oil said its Canadian subsidiary is preparing to resume drilling at a well in Newfoundland.

Tests earlier this year showed the site was not viable, particularly while oil prices were low.

The discovery marked the start of a turbulent year for Manchester-based Enegi in which it admitted the Canadian business, PDI Production, was “technically insolvent” and group losses widened.

But it has since rengotiated PDI’s debts and sold a 30% interest in the well for £1.4m. It is also raising £1.5m with a new share placing.

Today the group said pressure at the well had improved, indicating it is in contact with a large volume of oil, “but connectivity to the wellbore is poor”.

By resuming operations Enegi hopes to provide some income for PDI and gain a better understanding of the well’s performance.

Chief executive Alan Minty said: “We are delighted to re-commence operations. When we originally drilled the well earlier this year the prevalent conditions and high costs associated with winter operations made the well uneconomic at that time. Flowing the well now will not only provide us with some revenues, but will also provide further technical information about the well.”