Union Jack Oil (UJO ), a UK-focused onshore conventional explorer, noted an update by Egdon Resources regarding projects in which the two companies share interest.
Wressle-PEDL180/182
Union Jack Oil holds a 40% interest in Wressle. Egdon is the operator of Wressle and holds a 30% interest in the project.
Wressle is Union Jack Oil's flagship asset. Egdon said Wressle passed cumulative production of over 341,100 barrels on 12 January 2023, with zero water-cut. The current daily production rate at Wressle is approx. 850 bopd, although a daily rate of over 1000 bopd was achieved in December.
Egdon said three microturbines have been delivered to Wressle, expected to generate all site electricity and enable up to a 20% uplift in oil production. 3D seismic reprocessing has been completed to confirm final locations for future appraisal and development drilling.
Planning and permitting for development of Penistone Flags has also commenced, with drilling planned for H2 2023 and work in progress to collect and export gas from the location.
Other projects
Egdon also updated markets on its other joint projects with Union Jack, including Keddington-PEDL005 (Union Jack owns 55%), Biscathorpe-PEDL253 (Union Jack owns 45%), and North Kelsey-PEDL241 (Union Jack 40%)
At Keddington, Egdon said reprocessing of 3D seismic data was being finalised to inform a final sub-surface location for a side-track well targeting approximately 160,000 barrels of incremental oil production. Drilling is expected in H2 2023.
At Biscathorpe, a planning hearing was held on 11 October 2022 and the inspector's decision is awaited. Preparations for drilling in H2 2023 would follow from a successful planning appeal.
At North Kelsey, Egdon submitted a planning in appeal in August 2022, and has been informed the appeal will be held as a hearing with the detailed timing awaited from the planning inspectorate.
David Bramhill, Executive Chairman of Union Jack Oil, commented:
"Union Jack continues to generate robust revenues from Wressle which is currently delivering record consistent oil production, expected to be even further enhanced when the microturbines are fully commissioned and operational.
We also expect a material uplift in production as the Penistone Flags development and gas to wire operations unfold."
View from Vox
As usual, Wressle was the focus of today's update. The asset's value has continuously increased since recommencement of operations in August 2021, with Union Jack last month passing US$12m of revenues from the project. With daily production now at ~850 bopd with peaks of over 1000 bpod, the project is one of the most productive conventional-producing UK onshore oilfields, set to become second only to Perenco's Wytch Farm.
A second revenue stream is expected from Penistone Flags where a gas monetisation plan is in place. When complete, Union Jack will collect and export gas from the site rather than flaring it. Penistone Flags has 1.6mmboe of gross 2C resources, compared to existing 0.7mmboe gross 2P in the producing Ashover Grit and Wingfield Flags. A development well is planned for Penistone Flags in H2 2023.
Permits and appeals are also pending for drilling at Keddington and Biscathorpe in H2 2023. This year is shaping up to be a major value inflection point for Union Jack Oil. We recommend investors interested in the energy sector follow the company and stay tuned for more news on all aforementioned pending projects and upgrades.
Union Jack continues to be cash flow positive 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. The company remains debt free with unaudited revenues from 1 January 2022 to date in excess of £8.4m.
As of 2 January 2023, UJO's cash balance stood at £9.9m, following a maiden special dividend totaling over £900k in December 2022, and recent Wressle site upgrades worth £250k.
UJO shares are already up 7.7% YTD and up 90% in the past 12 months, as Wressle continues to outperform.
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