Union Jack Oil (UJO ) has released an operational and financial update which it says provides “tangible confirmation” of the progress it is making as it looks to the future “with enthusiasm.”
In an update released today, Union Jack said its Wressle-1 well ‘continues to comfortably exceed initial expectations’ of 500 barrels of oil per day (gross) since its successful completion of the proppant squeeze and subsequent coiled tubing operations in August.
Works to upgrade its gas incineration system are complete while production site upgrades are ‘ongoing.’ The well continues to flow under a highly restricted choke of 20/64 of an inch, it said.
To date, the well has produced high quality oil at a constrained rate during ongoing upgrades at an average rate of 666 bopd following the upgrade of the gas incineration system.
In practice, this means 266 barrels net to UJO plus 368,000 cubic feet of gas (147,200 cubic feet net to UJO) over the past seven days, equating to 727 barrels of oil equivalent per day.
The Company said it expects to see the completion of testing of the full potential of the well during early 2022 and that decisions will be made in 1Q22 on the plateau production rate, to match with longer-term operational objectives and prudent reservoir management.
Its 2022 focus will move to ‘progressing the optimal method of gas monetisation and finalising plans for the development of other hydrocarbon bearing zones to access the identified material contingent resources, with particular focus on the Penistone Flags reservoir,’ it said.
Commenting, Executive Chairman of Union Jack, David Bramhill, told investors: “Wressle is still in the infancy of its development and despite restricted flow and continuing site upgrades, net revenues to Union Jack have been material since mid-August 2021.
We announced on 27 October 2021, that Wressle had generated US$1,000,000 of net revenues to the Company and we look forward to announcing the next net revenue milestone early in 2022.”
At the Keddington oil field, in which the company holds 55% interest, a detailed subsurface review of the field and the surrounding licence area has highlighted an opportunity to increase production via a new development side-track well for which planning is already in place.
Reservoir engineering work has been completed to confirm a target area in the south-east of the licence area which would add up to 85,000 to 120,000 barrels of recoverable oil.
The Company highlighted that these amounts of recoverable oil could be produced and monetised using existing production equipment already in place and being utilised on site.
The Company noted that well specific modelling and detailed planning will be completed in the coming period with a view to being in a position to drill the side-track well during 2022.
Last month, a planning application for a side-track drilling operation, associated testing and long-term oil production at the Biscathorpe site, in which UJO holds 45% interest, was refused by Lincolnshire County Council (LLC) despite being recommended for approval by its officers.
The Company informed investors that the formal decision notice was issued on 6 December 2021 and that the Operator is currently reviewing in detail the reasons for refusal with their planning and legal advisers and considering other options which is likely to lead to an appeal.
Union Jack said planning applications were submitted to LLC in early December 2021, to extend the existing planning consents by 12 months and amend the bottom hole target location for the planned North Kelsey well, in which Union Jack holds a 50% interest.
It said applications have now been validated and the consultation period has begun. Subject to receipt of planning consent the North Kelsey well could be drilled later in 2022, it noted.
“When the planned site upgrades are complete, we await, with anticipation, the scale of the net revenues available from Wressle in respect of a full year of production as we believe these contributions will be transformational.
Keddington and Fiskerton oil fields also provide additional revenue which support our projected year end 2021, net revenues,” said Bramhill.
As of 16 December 2021, Union Jack held a cash balance of £6.06m. Projected revenues to 31 December 2021 are expected to be in-excess of £1,760,000 (2020 audited, £241,467) while as at 16 December 2021 the company’s net asset value is £20.2m and it is debt free.
“With the planned activity across our material projects, we believe that there will be a steady stream of RNS announcements, updates, research publications and reports published throughout 2022. Union Jack is in a sound position both operationally and financially and we look forward to the future with enthusiasm,” Bramhill added.
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