Union Jack Oil (UJO) , an onshore-focused hydrocarbon explorer with assets in the UK and US, announced a further expansion of its US portfolio via the acuiqision of three packages, brokered by its partner Reach Oil & Gas. The royalties purchased are located within the Bakken Shale, North Dakota; Permian Basin, Texas; and Eagle Ford Shale, Texas.
Bakken Shale, Williston Basin, North Dakota is a diversified, 96-well interest package, located in Dunn, McKenzie and Williams counties. It has 76 proved, developed and producing wells, 8 drilled and uncompleted wells, 8 permitted wells, and 2 newly completed wells awaiting pay status. Furthermore, there are 38 undrilled well locations and 12 areas allocated to produce oil and natural gas.
The Permian Basin package in Texas is an 8-well producing unit located in Howard and Borden counties and operated by Tulsa-based Vital Energy. Also in Texas, Eagle Ford Shale is a 9-well producing horizontal well package located in DeWitt county and operated by ROCC Operating.
The total combined cash consideration for the royalties was c. US$168k (£133k), funded from existing cash balances.
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Union Jack Oil expands its US portfolio with 3 additional packages in North Dakota and Texas as its relationship with Reach Oil & Gas grows. The acquisitions bring the total number of UJO assets in the two US states to 165. The new royalties are held in perpetuity with an expected economic life of over 26 years and a current IRR of over 20%
Showing the most promise is the 96-well Bakken Shale package in North Dakota, which has strong cashflow and significant upside. Operators in the area include Burlington Resources, Continental Resources, Hess, Chord Energy, WPX Energy, Grayson Mill Operating, and Kraken Operating.
The acquisitions were brokered by Reach Oil & Gas, which recently entered a farm-in agreement with UJO for a 45% interest in a project to assess the Bowlegs prospect in Oklahoma. Yesterday, the 2 companies announced the imminent spudding of a new Andrews-1-17 discovery well targeting the prolific Hunton Limestone reservoir, potentially leading to rapid commercial production.
Only 2 months after announcing its expansion into the US onshore market, UJO has a diversified portfolio in four US states. The company's decision to add US assets to its UK-based portfolio is in line with its strategy of acquiring material interest in projects with quick expected development times, capable of adding significant cashflow. The partnership with Reach should open up further opportunities to access high-value prospects in the US.
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