Union Jack Oil (UJO), a UK-focused onshore conventional explorer, noted recent announcements by Europa Oil & Gas and Egdon Resources on projects in which Union Jack holds interest, most notably the Wressle project located within licenses PEDL180 and PEDL182 in North Lincolnshire. Union Jack holds a 40% interest in Wressle, operator Egdon Resources holds a 30% stake, and Europa Oil & Gas holds the remaining 30%.
Europa Oil & Gas (EOG ) said net production at Wressle to Europa had increased 55% in H1 2023, exceeding expectations. The well continues to produce under natural flow with zero water cut, remaining highly cash generative. New seismic data has highlighted a potentially significant increase in resources from the Ashover Grit, and results are being incorporated into the field development plan. The next Wressle well will be drilled "at the earliest opportunity", subject to regulatory approval.
Newly implemented gas utilisation at Wressle is expected to result in material production increases in H2 2023. The first phase of the gas utilisation project was completed in January whereby three microturbines were connected to provide site power, which have so far resulted in a c. 10% increase in oil production. The second phase will be the installation of a gas engine to generate 1.4 MW of electricity into a local private power network.
Egdon Resources (EDR ), Wressle's operator and 30% owner, also issued a statement calling Wressle "the standout asset for Egdon" as it produced an average of 689 bopd for the company during H1 2023, reaching 770 bopd in March 2023. On 28 March 2023, total field production from Wressle exceeded 400,000 barrels of oil with no water seen to date.
Egdon also mentioned the Biscathorpe PEDL253 and North Kelsey PEDL241 "volumetrically significant" prospects, each having gross mean prospective resources of c. 6.5m barrels. Drilling will be dependent on the outcome of planning appeals and a positive outcome would be expected in H1 2024.
In Keddington PEDL005(R), Egdon identified a new drilling location in the east targeting 180,000 barrels of incremental production. Planning is underway and the well is liekly to be drilled in H2 2023.
View from Vox
The news markrs the great progress reported at Wressle that we have come to expect. Wressle has been a home run for Union Jack and the other two owners as it has become the second most productive onshore UK oilfield, continuing to surpass forecasts.
To summarise the updates, Europa and Egdon reported another significant half-year increase in production with over 400,000 barrels of oil produced to date and no water seen yet. New 3D seismic data has highligthed a potentially significant increase in resources from the Ashover Grit, with planning and permitting work underway for a new well or wells to be drilled at the earliest opportunity, pending regulatory approval.
Gas monetisation at Wressle has already yielded a 10% increase in oil production via installation of three microturbines. The second stage of the gas utilisation plan will involve the installation of a separate gas engine to generate and export 1.4 MW of electricity into a local private power network.
Revenues for Union Jack from Wressle asset continue to climb, now at US$14m after reaching US$13m on February 6, and $12m on January 5. This comes 19 months after operations at Wressle recommenced on 19 August 2021.
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. Union Jack remains debt free with cash balances, short-term receivables and investments at over £10.5m as of 24 March 2023.
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