Union Jack Oil ups stake in PEDL253 to 22pc

Union Jack Oil announced on Tuesday that it has signed a farm-in agreement for a further 10% licence interest in PEDL253, increasing its economic interest to 22%.

The AIM-traded firm said the drill-ready conventional Biscathorpe-2 well was scheduled to be drilled around mid-year 2018.

It said Biscathorpe represented a “highly attractive, risk-adjusted” investment opportunity for Union Jack, with gross mean prospective oil resources of 14 million barrels and a 40% geological chance of success.

Biscathorpe-2 also represented the first project with Union Jack's commercial partner, Humber Oil & Gas, where both parties acquired a 10% interest.

“We are pleased to be able to further increase our interest in the drill-ready conventional Biscathorpe-2 well to 22% that is planned to be drilled around mid-year 2018,” said Union Jack chairman David Bramhill.

“Biscathorpe-2 holds considerable upside potential for our company with gross prospective oil resources of 14 million barrels and a high geological chance of success of 40%.

“The oil logged in BP's 1987 well, Biscathorpe-1, has significantly de-risked the Biscathorpe Prospect.”

Bramhill said Union Jack's proprietary economic modelling of the Biscathorpe Prospect highlighted its attractiveness, and showed a pre-drill value for the success case of around £24m net to Union Jack, using the industry standard net present value after tax at a 10% discount rate.

He said that was “significantly in excess” of the approximate £1m drilling cost the firm would be incurring, for which it was fully funded following our recent placing.

“We look forward to the drilling of the Biscathorpe-2 well this year.

“This well, together with the company's wider portfolio, and the newly-formed commercial partnership with Humber, puts Union Jack in a strong position to deliver growth in reserves, production and asset value, while adhering to our principles of strict financial and technical disciplines.”