TIDMUJO
RNS Number : 9291L
Union Jack Oil PLC
18 January 2021
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
18 January 2021
Union Jack Oil plc
("Union Jack" or the "Company")
Acquisition of a Further 15% Interest in the Biscathorpe Project
PEDL253
Union Jack Oil plc (AIM: UJO), a UK focused onshore hydrocarbon
production, development and exploration company is pleased to
announce that it has agreed to acquire a further 15% economic
interest in PEDL253 containing the Biscathorpe project
("Biscathorpe") from Humber Oil & Gas Limited ("Humber").
Following completion of the acquisition Union Jack will hold a
45% interest in PEDL253.
Highlights
-- PEDL253 is located within the proven hydrocarbon fairway of
the Humber Basin, on-trend with the Keddington oilfield (Union Jack
55%) which produces oil from a Carboniferous Westphalian aged
reservoir
-- Union Jack will acquire a 15% interest in PEDL253, containing
the Biscathorpe project, increasing its interest to 45%
-- Oil bearing Dinantian Carbonate reservoir of 57 metres has
been confirmed by independent petrophysical analysis and oil
samples from cuttings
-- Dinantian oil play has gross Mean STOIIP of 24.3 million
barrels of oil (mmbo) with an upside of case of 36 mmbo
-- Evidence for a thickened Westphalian sandstone interval is apparent
-- Gross Mean Prospective Resources associated with the
Westphalian target total 3.95 mmbo with an upside case of 6.69
mmbo
-- 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 GBP55.6 million
-- Planning application to be submitted during February 2021 for
side-track drilling, testing and long-term production
-- Cash consideration of GBP500,000 to be paid on Oil and Gas
Authority (OGA) approval and lodging of associated documents to
allow licence interest transfer and, following receipt of various
planning approvals, a contingent payment of GBP500,000
Commenting, David Bramhill, Executive Chairman of Union Jack,
said:
"We are pleased to have taken this opportunity to increase our
interest to 45% in Biscathorpe, that Union Jack's technical team
believe represents a material and commercially viable hydrocarbon
resource that remains un-tested.
"The collective extensive technical information analysed over
the past months, combined with 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."
Acquisition Details
Under the terms of the Acquisition, the Company has entered into
a Sale and Purchase Agreement with Humber, whereby Union Jack will
acquire its 15% interest in PEDL253 for a cash consideration of
GBP500,000 that will be paid on receiving OGA approval for the
transfer of interest and the lodging of associated documents to
allow transfer.
A contingent consideration of GBP500,000 will become payable to
Humber on receipt of planning approval from Lincolnshire County
Council for the side-track drilling operation, associated testing
and the approval to undertake long-term production of hydrocarbons
in a successful drilling case.
The Effective Date of the Acquisition is 1 January 2021.
Monies payable to Humber will be financed from the Company`s
existing cash balance.
Completion of the Acquisition is subject to OGA approval and
certain precedents being satisfied.
Upon completion of the Humber acquisition, the interests held in
PEDL253 will be as follows:
Egdon Resources U.K. Limited (Operator) 35.8%
Union Jack Oil plc 45.0%
Montrose Industries Limited 19.2%
Oil & Gas Advisers Limited acted as financial adviser to the
Company in respect of this transaction and Gneiss Energy acted as
financial adviser to Humber.
Biscathorpe
Biscathorpe is located within the proven hydrocarbon fairway of
the Humber Basin, on-trend with the Keddington oilfield (Union Jack
55%) which produces oil from a Carboniferous Westphalian aged
reservoir.
The PEDL253 Joint Venture partnership has now completed
extensive and detailed studies of the Biscathorpe project,
including the reprocessing and remapping of 264 square kilometres
of 3-D seismic. This work has been integrated with the results of
the Biscathorpe-2 well, resulting in a significantly enhanced
understanding of the prospectivity within the Biscathorpe project
area. The results of this extensive exercise concluded that a
possible material and commercially viable hydrocarbon resource
remains to be tested.
Accessible target areas have been identified where evidence for
a thickened Westphalian sandstone reservoir interval is evident on
the reprocessed 3-D seismic. These areas will be targeted by a
side-track of the existing Biscathorpe-2 well which was suspended
once drilling operations were concluded in 2019. The planned
side-track will also target the oil column logged in the underlying
Dinantian Carbonate in Biscathorpe-2 and as further described
below.
The Mean Prospective Resources associated with the Westphalian
target area are estimated by the Operator, Egdon Resources plc to
be 3.95 mmbbls, with an upside case of 6.69 mmbbls. Preliminary
economic modelling demonstrates that the Westphalian target is
economically robust in the current oil price environment with
break-even full-cycle economics estimated at US$18.07 bbl and a
gross NPV(10) valuation of GBP55.6 million.
The Westphalian objective was absent at the Biscathorpe-2 well
location, however, hydrocarbon shows with background gas and sample
fluorescence were observed over the entire interval from the top of
the Dinantian to the Total Depth of the well (an interval of over
157 metres) with a total of 57 metres interpreted as being oil
bearing in the petrophysical analysis.
A geochemical analysis of the gas data and hydrocarbons
extracted from drill cuttings was originally commissioned by Union
Jack and carried out by Applied Petroleum Technology (UK) Limited
("APT"). The results of this analysis show a hydrocarbon column of
33-34 API gravity oil in the Dinantian Carbonate, comparable with
that produced at the nearby Keddington oilfield.
An assessment of the Dinantian oil volumes has also been
modelled with volumetric assumptions as being filled to spill and a
proven likely live oil column following the results of the APT
exercise. Additionally, data evaluated at the base of the analysed
section were suggestive of possible extra hydrocarbon pay at the
lower end of the Dinantian interval.
Competent Person`s Statement
In accordance with the "AIM Rules - Note for Mining and Oil and
Gas Companies," the information contained within this announcement
has been reviewed and signed off by Graham Bull, Non-Executive
Director, who has over 46 years of international oil and gas
industry experience.
Evaluation of hydrocarbon volumes has been assessed in
accordance with 2018 Petroleum Resources Management System (PRMS)
prepared by the Oil and Gas Reserves Committee of the Society of
Petroleum Engineers (SPE) and reviewed and jointly sponsored by the
World Petroleum Council (WPC), the American Association of
Petroleum Geologists (AAPG), the Society of Petroleum Evaluation
Engineers (SPEE), the Society of Exploration Geophysicists (SEG),
the Society of Petrophysicists.
For further information, please contact:
Union Jack Oil plc Via Cassiopeia Services Ltd
David Bramhill
SP Angel Corporate Finance LLP +44 (0)20 3470 0470
Nominated Adviser and Broker
Richard Morrison
Richard Hail
Caroline Rowe
Cassiopeia Services Ltd +44 (0)7949 690 338
Public Relations
Stefania Barbaglio
Glossary of Terms
Term Description
3-D seismic A set of numerous closely spaced seismic lines
that provide a high spatially sampled measure
of subsurface reflectivity. Typical receiver
line spacing can range from 300m (1,000ft)
to over 600m (2,000ft), and typical distances
between shot points and receiver groups are
25m (82ft) (offshore and internationally)
and 110ft or 220ft (34 to 67m) (onshore US,
using values that are even factors of the
5,280ft in a mile).
API Gravity An arbitrary scale expressing the density
(gravity) of liquid petroleum products devised
jointly by the American Petroleum Institute
and the National Bureau of Standards.
Oil with the lowest specific gravity at atmospheric
conditions and 70 degrees Fahrenheit has the
highest API gravity.
The measuring scale is calibrated in terms
of degrees API. API gravity is the industry
standard for expressing the specific gravity
(SG) of crude oils. A high API gravity means
lower specific gravity and lighter oils.
Geochemical Analysis The process through which the chemical compounds
of the target substrate is assessed.
Mean The sum of a set of numerical values divided
by the number of values in the set.
mmbbls Million barrels of oil.
NPV(10) The present-day value of the cumulative cash
flows from a project using a 10% annual discount
rate.
Petrophysical Computational analysis of the rock and fluid
Analysis properties of a geological formation using
measurements of the physical properties of
the rock, such as its natural radioactivity,
its density, the passage of sound waves and
the electrical and other physical responses
to define amongst other things the nature
of the pores within the rock and the types
of fluids (water, oil or gas) which are present
in those pore spaces.
Prospective Resources Those quantities of petroleum that are estimated,
as of a given date, to be potentially recoverable
from undiscovered accumulations.
Reservoir A rock formation capable of containing oil
and gas in its natural pores and fractures.
Typical reservoirs comprise sandstones or
limestones (carbonates).
Side-Track A well drilled directionally out of an existing
wellbore.
Stock Tank Oil Initially in Place. All estimated
STOIIP quantities of petroleum that are estimated
to exist originally in naturally occurring
accumulations, discovered and undiscovered,
before production.
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