Union Jack Oil (UJO) , a UK-focused onshore hydrocarbon explorer, updated markets on its 17%-owned West Netwon project located within licence PEDL183. Union Jack said the Environment Agency has greenlit the West Newton B wellsite and allowed the use of oil-based fluids within the Permian formations during drilling and testing operations.
Union Jack referenced 3rd party technical studies demonstrating that the use of oil-based drilling fluids would be key in enhancing flow rates from wells drilled in the West Newton field. UJO said plans for the proposed horizontal well from West Newton B are already underway and commencement of operations is targeted for H1 2024.
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A key permit is granted to Union Jack Oil ensuring maximum flow rate from its upcoming 1,500m horizontal well at West Newton. As of September 22, the site was estimated to hold gross 2C unrisked technically recoverable resources of 197.6 bcf of sales gas, with an estimated 85.5% geological chance of success. Path selection and engineering design for the well have already been completed and operator Rathlin Energy has engaged drilling rig and other service contractors.
The West Newton project should further benefit from its location in an area that is well-connected to regional infrastructure, enabling it to quickly deliver significant volumes of on-shore gas into the UK energy market at a time when Britain's energy independence is a top concern and priority for the Government. Domestically produced natural gas will remain a vital part of the UK energy mix, filling the gaps in demand that renewables cannot currently fill.
Union Jack continues to be highly cash generative, covering all G&A, operational and contracted or planned capex costs, including drilling activities and work programme commitments for at least the next 12 months. The company remains debt free with cash at £9.25m as of September 8 2023. Additionally, Union Jack's buy-back programme has so far acquired 4.6% of shares in issue, improving EPS accordingly. Over £3m has been returned to shareholders via dividends and buybacks since October 2022.
Investors welcomed today's news, sending UJO shares 7.5% higher on Wednesday morning. Union Jack is fully funded for the drilling and testing of the horizontal well at West Newton as its 40%-owned flagship Wressle project has provided consistent cashflows, being one of the most productive UK onshore oilfields.
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