Union Jack Oil (UJO) , a UK-focused onshore hydrocarbon explorer, announced that it has passed US$17m in cumulative net revenues from its flagship Wressle project, located within licenses PEDL180 and PEDL182 in North Lincolnshire. Union Jack holds a 40% interest in Wressle.
Union Jack reached the milestone 2 years after recommencing production at Wressle in August 2021. The well has been producing under natural flow at approximately 780 barrels per day. Cumulative production from the Wressle-1 well totalled 492,876 barrels through end of July 2023.
The oil producer also reported small amounts of water being observed, with water cut averaging 3.72% of total production in July 2023. Union Jack said the advent of water was being incorporated into updated reservoir modelling and resource assessment that will be part of a new Competent Person's Report (CPR) prepared by ERCE. A more detailed report is expected once the CPR is out.
Union Jack is debt free as of 2 August 2023, with cash balances and investments at over £10.8m.
David Bramhill, Executive Chairman, commented: "The US$17,000,000 net revenues achieved to date from Wressle (UJO 40%) has been transformational and continues to bolster the Company's Balance Sheet, complemented by additional cash-flow from the Keddington oilfield (UJO 55%).
Water breakthrough is not uncommon in any reservoir and following the minor water cut observed, producing operations are actively being managed to effectively optimise oil production."
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Revenues from Union Jack's flagship Wressle asset continue to climb, now at US$17m, up from US$12m at the start of the year. This comes 2 years after operations at Wressle recommenced on 19 August 2021. Since then Wressle-1 has delivered steady production, continuing to bolster Union Jack's balance sheet, including a maiden profit, a comfortable cash position, and significant distributions to investors. In total, £3m has been returned to shareholders via dividends and buybacks since October 2022.
Union Jack continues to be highly cash generative, covering all G&A, Opex, and contracted or planned Capex costs, including drilling activities and work programme commitments for at least the next 12 months. Union Jack remains debt free, with cash and investments at over £10.8m as of 2 August 2023.
Cashflow has been further complemented by the company's 55%-owned Keddington oilfield where planning is underway for a side-track well. Additionally, Union Jack's buy-back programme has so far acquired 4.6% of shares in issue, improving EPS accordingly. An interim dividend of 0.3p was paid on 28 July 2023.
The start of water production occurred significantly later than originally anticipated, being further evidence that expected recoverable volumes from the Ashover Grit will be at the higher end of the estimates detailed in the independent Competent Person's Report (CPR) prepared by ERCE in September 2016.
The 2016 CPR forecast gross volumes from the Ashover Grit of 2P 0.54 MMstb and 3P 1.12 MMstb. The advent of water is now being incorporated into ERCE's reservoir modelling and resource assessment work streams, which will be reflected in a new CPR. Union Jack is also preparing a full-field development plan, aiming to maximise oil recoveries from the Ashover Grit, Wingfield Flags, Penistone Flags, and other nearby prospects at Wressle.
In November 2022, Union Jack announced a gas monetisation programme at Wressle that will unlock gas revenues and enable Wressle's oil production limit to be lifted. As it stands, the Wressle-1 well peaks at 1000 bopd, with gas monetisation expected to have a materially positive impact on H2 2023 production.
Gas monetisation has already yielded a 10% increase in oil production via installation of three microturbines. The second stage of the gas utilisation plan will involve the installation of a separate gas engine to generate and export 1.4 MW of electricity into a local private power network.
Today's milestone further solidifies Wressle's status as one of the most productive UK onshore oilfields, now generating in excess of US$1m a month. Strong cashflows from Wressle also underpin development elsewhere across Union Jack’s portfolio including Keddington (55% interest), Biscathorpe (45%), and North Kelsey (40%).
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