Union Jack Oil appoints Gaffney, Cline & Associates to prepare CPR for West Newton
(UJO ) said it has appointed the international energy consultancy, Gaffney, Cline & Associates Limited, to prepare a Competent Person's Report ("CPR") for the group.
The UK focused onshore hydrocarbon production, development and exploration firm said the consultancy has been appointed to prepare a CPR in respect of UJO’s PEDL183 licence which include the West Newton discoveries at the WNA-1, WNA-2 and WNB-1Z wells.
UJO holds a 16.665% economic interest in PEDL183 which contains the WNA-1, WNA-2 and WNB-1Z hydrocarbon discoveries. It said the CPR will be executed immediately following completion of the imminent well testing programme of the WNB-1Z and WNA-2 wells.
Last month, UJO told investors that the cased hole logging programme undertaken at West Newton had confirmed a good cement bond in the B1Z well and overall wellbore integrity.
The group also highlighted that data from its Vertical Seismic Profiling was now in Romania being processed but initial indications have shown that the data is of ‘good quality.’
The VSP data will be used as part of the JV’s updated assessment of resources for the West Newton field and will also potentially be used to identify new well locations going forward.
The next phase of operations will be conducted utilising a service rig and will comprise perforation and stimulation of the Kirkham Abbey formation and subsequent flow testing of the well. This phase is expected to commence this month and will take around four weeks to complete. Flow testing of the A2 well will then follow the conclusion of operations at B1Z.
Analysts at Arden Research concluded that Union Jack is ‘well-funded’ from its end June 2020 cash holding of £4.6m (zero debt) plus £7.0m from the September 2020 placing.
Rathlin, the operator of West Newton, believes the site has the potential to provide local feedstock to a Humber net zero project replacing the need for imported hydrocarbons while developing indigenous energy sources, contributing to the economic welfare of the region.
Shares in Union Jack Oil have increased by nearly 20% in value since the beginning of 2021. The stock was trading 0.27% lower this morning at 36.9p following the announcement.
Reasons to UJO
UJO is an onshore oil and gas exploration firm with a focus on drilling, development and investment opportunities in the UK hydrocarbon sector, and currently holds interests in 13 licences in areas including, inter alia, the East Midlands, Humber Basin and East Yorkshire.
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
In recent months, Operator, Egdon Resources U.K. Limited, commenced operations to re-complete and reperforate the well located at the Wressle hydrocarbon development site.
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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