Union Jack acquires another 3.33pc of Wressle-1 licences

Union Jack Oil announced on Wednesday that the UK Oil and Gas Authority had now approved its acquisition of a further 3.33% interest in PEDL180 and PEDL182, which contain the Wressle-1 discovery, from Celtique Energie Petroleum, which it had previously announced on 6 March.

The AIM-traded company now held a 15% interest in both licences following completion of the transaction.

It said the consideration for the acquisition was £0.6m for the additional 3.33% economic interest.

That consideration, comprising a £60,000 deposit paid to Celtique and a final payment of £0.54m, was paid to Celtique's solicitors in March, with the final payment being held in escrow until completion of the transaction.

The consideration was paid for from monies received from the placing, announced on 27 February, of approximately £1.4m before expenses, the board said.

Funds raised were being used to acquire further interests in assets contained within Union Jack's existing portfolio of near-term production and drill-ready prospects, and further funds resulting from the placing remained to be invested.

Union Jack's current cash balance was in excess of £2 million, and the company was reportedly fully funded for its other committed projects including the drill-ready Biscathorpe-2 and Holmwood-1 conventional wells ,with gross mean prospective resources of 14MMbbl and 5.6MMbbl of oil respectively, both expected to be drilled during the second half of 2017.

The board said PEDL180 and PEDL182 contained the Wressle-1 discovery, from which first commercial oil is expected to flow at an initial constrained rate of 500 barrels of oil per day, following planning approval.

“We are delighted to be able to increase further our interest in the attractive Wressle asset to 15%,” said chief executive David Bramhill.

“The development of Wressle now only remains subject to receipt of planning permission.

“Subject to receipt of this approval and successfully bringing the project onstream, management expect the Wressle development to generate meaningful cash flows and transform the financial position of the company.”

Bramhill said that at the current oil price, management expected the net cash flow generated from Wressle attributable to Union Jack to be significant.

“The board believes that production at Wressle will generate excess cash after accounting for the company's on-going working capital obligations.

“The acquisition of an increased stake in Wressle is consistent with our strategy of building a balanced portfolio of production, development, appraisal and exploration assets.”