Union Jack Oil buys three US royalty packages

Union Jack Oil announced the expansion of its mineral royalty portfolio on Tuesday, with the acquisition of three additional packages brokered by Reach Oil & Gas.

The AIM-traded firm said the newly-acquired royalties were situated within prominent regions including the Bakken Shale in North Dakota, the Permian Basin in Texas, and the Eagle Ford Shale in Texas.

In the Bakken Shale, Union Jack secured a diversified producing 96-well interest package in Dunn, McKenzie, and Williams counties, North Dakota.

The company said the asset boasted significant cash flow potential with 76 proved, developed, and producing wells, along with additional drilled and uncompleted wells, permitted wells, newly-completed wells awaiting pay status, undrilled well locations, and areas allocated for drilling and production.

Quality operators such as Burlington Resources, Continental Resources, and others enhanced the asset's value.

Additionally, Union Jack said it had acquired an eight-well producing unit in the Permian Basin, Texas, operated by Vital Energy, and a package of nine producing horizontal wells in the Eagle Ford Shale, Texas, operated by ROCC Operating.

The total cash consideration for the royalties amounted to $0.17m (£0.13m), financed from existing cash balances.

Union Jack said its existing royalties included assets in the Permian Basin and the Eagle Ford Shale.

“We are pleased to announce three additional royalties acquisitions, further expanding our cash-generating assets of producing properties in the US,” said executive chairman David Bramhill.

“To date, Union Jack holds interests in 165 producing wells in three prolific basins in Texas and North Dakota.

“We are particularly pleased to have purchased the Bakken Shale package which holds material upside.”

Bramhill said the company's intention was to continue to build a quality portfolio of remunerative US assets.

“The royalties are held in perpetuity and the expected economic life of these assets is more than 26 years with a current internal rate of return in excess of 20%.”

At 1222 GMT, shares in Union Jack Oil were up 0.9% at 16.9p.

Reporting by Josh White for Sharecast.com.