Union Jack Oil (UJO) , the late state exploration hydrocarbon investment company, has announced it agreed terms with Rathlin Energy, a subsidiary of Canadian registered Connaught Oil & Gas Ltd on a proposed farm-in for a 16.667% license interest in PEDL183.
PEDL183 is located onshore UK in East Yorkshire and within the Western sector of the Southern Zechstein Basin and contains the major West Newton gas discovery and numerous other prospects and leads.
After extensive due diligence conducted by geologists and the team at Union Jack Oil, The West Newton conventional appraisal well has Best Estimate Contingent Resources of 189 Bcf of gas equivalent or 31.5 million barrels of oil equivalent, with plans to be drilled in Q1 2019.
The well has compelling immediate and future economic value, with a NPV10% of $247m and 52.5% ROR for the gas discovery alone. The farm-in terms were attractive with no cash costs upfront as all funding is to go towards drilling and license costs.
Union Jack's Commercial Partner, Humber Oil & Gas Limited ("Humber"), has participated on identical terms in the Proposed Farm-in and will result in it also acquiring a 16.667% interest.
Union Jack Oil raised £2.25 million before expenses in an oversubscribed fundraising to fund the proposed farm-in and associated well costs. Humber’s director has a beneficial interest in 13% of the pre-placing issued share capital of Union Jack held by G.P. (Jersey) Limited and has increased shareholding to 15% of the Company's share capital following the fundraising.
As part of the proposed West Newton appraisal well, the Cadeby Reef oil exploration target will also be drilled as a secondary target. The Cadeby Reef has Best Estimate Prospective Resources of 79.1 million barrels of oil equivalent, with an estimated geological Chance of Success of 26%.
David Bramhill, Executive Chairman of Union Jack, commented: "The Proposed Farm-in and drilling of West Newton in Q1 2019 puts Union Jack in an even stronger position to deliver growth in reserves, production and asset value while adhering to our principles of strict financial and technical discipline."
Frazer Lang, Director of Humber said: "PEDL183 is one of the largest onshore licences within the UK and we are delighted to be investing in parallel in this project alongside our Commercial Partner, Union Jack.”
To hear CEO David Bramhill speak further about the farm-in and future of the company, listen to him on the Vox Markets podcast below
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