TIDMUJO
RNS Number : 1972I
Union Jack Oil PLC
20 March 2018
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement
20 March 2018
Union Jack Oil plc
("Union Jack" or the "Company")
Farm-in for an Additional 10% Interest in the Drill-Ready
Biscathorpe Prospect
Further to the announcement of 5 March 2017, the Directors of
Union Jack, a UK onshore focused hydrocarbon production,
development and exploration company (AIM: UJO), are pleased to
announce that the Company has signed a Farm-in Agreement for a
further 10% licence interest in PEDL253 increasing the Company's
economic interest to 22%.
Highlights
-- Biscathorpe Farm-in Agreement signed, increasing Union Jack's
licence interest to 22%, subject to OGA approval
-- The drill-ready conventional Biscathorpe-2 well is scheduled
to be drilled around mid-year 2018
-- Biscathorpe represents a highly attractive, risk-adjusted
investment opportunity for Union Jack with gross mean prospective
oil resources of 14 million barrels and a 40% geological Chance of
Success
-- Biscathorpe-2 represents the first project with Union Jack's
commercial partner, Humber Oil & Gas Limited ("Humber"), where
both parties have acquired a 10% interest
David Bramhill, Executive Chairman of Union Jack, commented:
"We are pleased to be able to further increase our interest in
the drill-ready conventional Biscathorpe-2 well to 22% that is
planned to be drilled around mid-year 2018. Biscathorpe-2 holds
considerable upside potential for our Company with gross
prospective oil resources of 14 million barrels and a high
geological Chance of Success of 40%. The oil logged in BP's 1987
well, Biscathorpe-1, has significantly de-risked the Biscathorpe
Prospect.
"Union Jack's proprietary economic modelling of the Biscathorpe
Prospect highlights its attractiveness and shows a pre-drill value
for the success case of circa GBP24 million net to Union Jack
(using the industry standard net present value after tax at a 10%
discount rate). This is significantly in excess of the approximate
GBP1 million drilling cost we will be incurring, for which we are
fully funded following our recent placing.
"We look forward to the drilling of the Biscathorpe-2 well this
year. This well, together with the Company's wider portfolio, and
the newly-formed commercial partnership with Humber, puts Union
Jack in a strong position to deliver growth in reserves, production
and asset value, while adhering to our principles of strict
financial and technical disciplines."
Farm-in Details
PEDL253 is located in the South Humber Basin and contains the
drill-ready Biscathorpe Prospect, where the Biscathorpe-2
conventional exploration well is planned to be drilled around
mid-year 2018.
Pursuant to the Farm-in, Union Jack and Humber will each acquire
6% of Egdon Resources U.K. Limited's interest in PEDL253 by paying
their pro-rata share of the cost of the Biscathorpe-2 well, plus an
additional GBP10,000 per percentage point interest acquired. In
addition, Union Jack and Humber will each acquire 4% of Montrose
Industries Limited's interest in PEDL253 under the same terms. The
Company is not required to make any up-front cash payment.
The Farm-in is subject to Oil & Gas Authority approval.
PEDL253 is within the proven hydrocarbon fairway of the South
Humber Basin and contains the drill-ready Biscathorpe Prospect and
is on trend with the Saltfleetby gas field, Keddington oil field
and the Louth and North Somercotes prospects. The Biscathorpe-1
well drilled by BP in 1987 encountered a thin oil filled sandstone
which is expected to thicken down-dip.
The Biscathorpe Prospect is a well-defined four-way dip closed
structure mapped from recently re-processed 3D seismic data..
The Biscathorpe-2 conventional well will be located in a
direction towards a potentially thicker sand development within the
structural closure of the trap. The Biscathorpe-2 well has received
full sanction from the PEDL253 partnership. The current Mean
Estimate Prospective Resource is 14 million barrels of oil (gross)
with a geological Chance of Success of 40%.
During 2017, Union Jack commissioned an independent review of
the Biscathorpe 3D seismic survey which was conducted by
geophysical consultants Sotwell Exploration Ltd ("Sotwell").
Sotwell's findings were encouraging, confirming the Biscathorpe
'concept' with good evidence from seismic attributes of the sand
thickening away from the Biscathorpe-1 well location, with the
Biscathorpe-2 location, in the opinion of Sotwell, appearing to be
optimal to appraise the prospect. In addition, Sotwell`s opinion is
that the whole area, within PEDL253, is attractive for hydrocarbon
exploration and that significant upside may exist due to potential
stratigraphic trapping.
The proposed Biscathorpe-2 well will involve conventional
drilling for oil trapped in a sandstone reservoir and, for clarity,
the operations at the site will neither now nor in the future
involve the process of hydraulic "fracking" for shale gas or
shale-oil.
Commercial Partnership with Humber Oil & Gas Limited
Union Jack and Humber recently signed a Memorandum of
Understanding ("MOU") to progress a Commercial Partnership where
both parties will seek to co-invest in the UK conventional upstream
onshore oil and gas sector.
The farm-in for a combined 20% economic interest in PEDL253 by
both Union Jack and Humber represents the first such commercial
collaboration between both parties under the MOU.
Resulting Licence Interests in PEDL253
Following the Farm-in by Union Jack and Humber, and subject to
OGA approval, the resulting economic interests in PEDL253 will
be:
Edgon Resources UK Limited
(Operator) 40.80%
Montrose Industries Limited 27.20%
Union Jack Oil Plc 22.00%
Humber Oil & Gas Limited 10.00%
For further information please contact:
Union Jack Oil plc +44 (0)7787 160 682
David Bramhill
SP Angel Corporate Finance
LLP +44 (0)20 3470 0470
Nominated Adviser
Lindsay Mair
Richard Hail
In accordance with the "AIM Rules - Note for Mining and Oil and
Gas Companies", the information contained within the announcement
has been reviewed and signed off by Graham Bull, Non-Executive
Director, who has over 46 years of international oil and gas
industry exploration experience.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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