Union Jack Oil acquires a further 15% in the Biscathorpe Project
(UJO ) unveiled that it has agreed to acquire a further 15% economic interest in PEDL253, containing the Biscathorpe project ("Biscathorpe"), from Humber Oil & Gas Limited for a total contingent consideration of £0.5m to be satisfied from existing financial resources.
Following completion of the acquisition, the UK focused onshore hydrocarbon production, development and exploration company will hold a 45% interest in the PEDL253 licence.
The £0.5m consideration will become payable to Humber on receipt of planning approval from Lincolnshire County Council for the side-track drilling operation, testing and the approval to undertake long-term production of hydrocarbons in a successful drilling case.
Union Jack highlighted to investors that a planning application for side-track drilling, testing as well as long-term production at Biscathorpe is to be submitted during February 2021.
"We are pleased to have taken this opportunity to increase our interest to 45% in Biscathorpe, that Union Jack's technical team believes represents a material and commercially viable hydrocarbon resource that remains un-tested,” said Executive Chairman, David Bramhill.
PEDL253 contains Biscathorpe, which is located within the proven hydrocarbon fairway of the Humber Basin, on-trend with the Keddington oilfield - of which Union Jack Oil holds a 55% interest - which produces oil from a Carboniferous Westphalian aged reservoir.
The oil bearing Dinantian Carbonate reservoir of 57m has been confirmed by independent petrophysical analysis and oil samples from cuttings, identifying gross mean stock-tank oil initially in place (STOIIP) of 24.3m barrels of oil (mmbo) with an upside of case of 36 mmbo.
There is also evidence of a thickened Westphalian sandstone interval. The company stated that Gross Mean Prospective Resources associated with the Westphalian target total 3.95 million barrels of oil (mmbo) with an upside case of 6.69 mmbo.
Bramhill stated that extensive technical information collated as well as APT’s conclusions on the likely presence of good quality oil, “have materially upgraded the resource potential and economic value of the project in our view, further supporting our opinion that PEDL253 remains one of the UK's largest onshore un-appraised conventional hydrocarbon licences."
Shares in Union Jack Oil have increased by 35% since the beginning of December 2020 to open at 0.18p following the announcement. The Company has stated its economic modelling of the Westphalian target yields break-even full cycle economics estimated at US$18.07 per barrel and a gross NPV(10) valuation of £55.6 million, which provides significant rationale to the acquisition of 15% at £0.5m.
Reasons to Follow UJO
West Newton
The UK focused onshore hydrocarbon explorer holds a 16.665% interest in PEDL183, containing the conventional West Newton A-1 discovery well and WNA-2 appraisal well.
West Newton is located at the heart of the Zero Carbon Humber project area, which aims to promote decarbonising technologies across industrial activities in the wider Humber region.
In October 2020, it reported that the onshore West Newton B-1 ("WNB-1") well - the next well following the successful West Newton A-2 ("WNA-2") appraisal well - had been spud.
Results from the drilling of WNB-1 are expected to inform a subsequent programme of testing to establish the well's productive capability as well as future drill operations.
North Kelsey
In recent months, UJO also increased its stake in the North Kelsey project by acquiring an additional 30% from Egdon Resources, taking its stake in the exploration project up to 50%.
Further financial obligations will be equal between Union Jack and Egdon Resources, in line with both parties’ 50% stake in the North Kelsey Prospect which is located in Lincolnshire.
The North Kelsey Prospect is a conventional oil prospect along trend from and analogous to the Wressle oil development, which lies around 15 kilometres to the northwest.
The UK- focused group said the prospect has been mapped from 3-D seismic data and has the potential for oil in up to four stacked conventional Carboniferous reservoir targets.
David Bramhill, Executive Chairman of UJO, described North Kelsey as “a low cost, drill-ready onshore acquisition for Union Jack in our focus area, consistent with our strategy.”
He said a further stake in the project increases the group’s exposure to a “potentially value adding project” as well as expanding UJO’s balanced drilling and development portfolio.
Subject to a successful farm-out, North Kelsey-1 is expected to be drilled during 2021.
Wressle
Operator, Egdon Resources U.K. Limited, commenced operations to re-complete and reperforate the well located at the Wressle hydrocarbon development site last week.
The Company highlighted that operations are expected to be completed to enable the Ashover Grit reservoir to be flowed prior to the end of January 2021, as previously advised.
The Ashover Grit reservoir is expected to produce 500 barrels of oil per day at a constrained rate, increasing UJO’s net production by an additional 200 bopd when fully on stream.
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