Union Jack Oil (UJO ) said it is already seeing “encouraging” indications from the company’s ongoing test operations of the West Newton B-1Z well located at West Newton licence.
The UK-focused onshore hydrocarbon exploration group holds a 16.665% economic interest in PEDL183 which contains the WNA-1, WNA-2 and WNB-1Z hydrocarbon discoveries.
The West Newton B-1Z completion and testing operations are targeting and fully appraising hydrocarbons within the conventional Kirkham Abbey Formation reservoir.
The Company explained how testing had begun in early June with an initial focus on the lower portion of the Kirkham Abbey. The results of the teasting operations at the well are expected to be used as “key data inputs into the ultimate development plans of PEDL183."
In early June, West Newton’s operator, Rathlin Energy, informed the JOA partners that the equipment required to complete and test the B-1Z well has been mobilised to the site. The duration of the completion and testing operations are expected to take around six weeks.
To date, Union Jack has perforated an initial interval of 25 metres of the 62 metre Kirkham Abbey hydrocarbon column. The Company told investors today that the apparent scale of completion fluid inflow into the formation is indicative of permeability in the system.
Gas, which is being recovered to surface under test conditions, has exhibited a strong similarity to analyses previously obtained from the West Newton A site wells with samples showing approximately 90% methane content and no native H2S (hydrogen sulphide).
While liquids recovered to surface are undergoing analysis, Union Jack said an additional 19 metre zone in the upper Kirkham Abbey has been identified for perforation and flow testing.
Looking ahead, the Company said operations continue on the clean-up of the lower portion of the Kirkham Abbey as well as further flow testing of the Kirkham Abbey formation.
Addressing investors, David Bramhill, Executive Chairman of UJO, said: "We are encouraged by the indications of permeability of the lower portion of the Kirkham Abbey under test, and the initial recovery of hydrocarbons to surface. "We are continuing with test operations in this zone which, along with the planned testing of additional zones, and the A-2 well, the results of which will be key data inputs into the ultimate development plans of PEDL183."
View from Vox
Analysts at Arden Research concluded that Union Jack is ‘well-funded’ from its end June 2020 cash holding of £4.6m (zero debt) plus £7.0m from the September 2020 placing.
Rathlin, the operator of West Newton, believes the site has the potential to provide local feedstock to a Humber net zero project replacing the need for imported hydrocarbons while developing indigenous energy sources, contributing to the economic welfare of the region.
Analysts have also said they expect the flow testing of the B-1Z and subsequently A-2 wells to begin shortly, with a CPR (which Gaffney Cline has been appointed to carry out) to follow based on the new data, and then a further new well before the end of 2021, it said.
In a research note, analysts said West Newton remains ‘the key asset’ for Union Jack, with the potential for the upcoming work programme to prove up a significant onshore resource and potentially open up development planning. As such, the flow testing programme, CPR and new well all represent key catalysts for Union Jack over the rest of this year, it said.
Reasons to UJO
UJO is an onshore oil and gas exploration firm with a focus on drilling, development and investment opportunities in the UK hydrocarbon sector, and currently holds interests in 13 licences in areas including, inter alia, the East Midlands, Humber Basin and East Yorkshire.
West Newton
The UK focused onshore hydrocarbon explorer holds a 16.665% interest in PEDL183, containing the conventional West Newton A-1 discovery well and WNA-2 appraisal well.
West Newton is located at the heart of the Zero Carbon Humber project area, which aims to promote decarbonising technologies across industrial activities in the wider Humber region.
In October 2020, it reported that the onshore West Newton B-1 ("WNB-1") well - the next well following the successful West Newton A-2 ("WNA-2") appraisal well - had been spud.
Results from the drilling of WNB-1 are expected to inform a subsequent programme of testing to establish the well's productive capability as well as future drill operations.
North Kelsey
In recent months, UJO also 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%.
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.
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.
Subject to a successful farm-out, North Kelsey-1 is expected to be drilled during 2021.
Wressle
In recent months, Operator, Egdon Resources U.K. Limited, commenced operations to re-complete and reperforate the well located at the Wressle hydrocarbon development site.
The Ashover Grit reservoir is expected to produce 500 barrels of oil per day at a constrained rate, increasing UJO’s net production by an additional 200 bopd when fully on stream.
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