Union Jack Oil (AIM: UJO ) has increased its stake in the North Kelsey project by acquiring an additional 30% from Egdon Resources, taking its stake in the exploration project up to 50%. 

Today’s agreement will also remove a previous funding obligation attached to UJO’s former 20% interest in North Kelsey, set out in a previous farm-in deal between UJO and Egdon. 

Further financial obligations will be equal between Union Jack and Egdon Resources, in line with both parties’ 50% stake in the North Kelsey Prospect which is located in Lincolnshire. 

The North Kelsey Prospect is a conventional oil prospect along trend from and analogous to the Wressle oil development, which lies around 15 kilometres to the northwest. 

The UK- focused group said the prospect has been mapped from 3-D seismic data and has the potential for oil in up to four stacked conventional Carboniferous reservoir targets.  

Egdon Resources, the prospect’s operator, estimates that the Prospective Resources range from 4.66m barrels to 8.47m barrels of oil, with a Mean Resource volume of 6.47m barrels. 

Shares in Union Jack Oil have traded in a tight range of 0.15p and 0.19p over the past month to open 1.35% lower this morning at 0.16p following the announcement. 

Earlier in September 2020, the existing planning consent for drilling North Kelsey-1 was extended to 31 December 2021 by the Lincoln County Council. In addition, UJO explained that requisite permits for drilling have now been received from the Environment Agency. 

David Bramhill, Executive Chairman of UJO, described North Kelsey as “a low cost, drill-ready onshore acquisition for Union Jack in our focus area, consistent with our strategy.” 

He said a further stake in the project increases the group’s exposure to a “potentially value adding project” as well as expanding UJO’s balanced drilling and development portfolio. 

Commenting on the exploration project further, he added, "North Kelsey sits within our focus areas of the East Midlands, Humber Basin and East Yorkshire and is on trend with our Wressle oil development project which is on-track to produce first oil later this quarter.” 

Subject to a successful farm-out, North Kelsey-1 is expected to be drilled during 2021. 

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