Union Jack Oil (UJO) signed a farm-in agreement with Rathlin Energy UK for a 16.665% licence interest in PEDL183, located onshore in East Yorkshire UK.
PEDL183 is in the Western sector of the Southern Zechstein Basin, containing the significant West Newton A-1 gas discovery with plans to commence drilling in Q1 2019.
"The drilling of the material West Newton conventional appraisal well, where success is expected to deliver a significant onshore gas development project, will be transformational for Union Jack.” Said David Bramhill, Executive Chairman of Union Jack
He added: “On completion of this Farm-in, Union Jack can book immediately 5.3 million barrels of oil equivalent Contingent Resources to its existing reserve and resource portfolio and once a Field Development Plan is in place, West Newton's Contingent Resources can be converted to Reserves.”
The appraisal well is set to be fully funded from the company’s cash resources, and if successful, it is expected to deliver a major onshore gas development.
Shares in Union Jack Oil were up to 0.107p a share following the announcement.
West Newton’s operator estimates a NPV of US$247 million for the project and a 52.5% rate of return on the gas discovery alone.
Frazer Lang, Director of Humber, and Union Jack's Commercial Partner, commented: "PEDL183 is one of the largest onshore licences within the UK and we are delighted to be investing in parallel in this project alongside our Commercial Partner, Union Jack.”
The company is also planning to drill deeper into the Cadeby Reef formation, which is estimated to have 79 million barrels of oil equivalent, as a secondary target.
Follow News & Updates from Union Jack Oil here:
