Union Jack buying another 3pc of Biscathorpe project

The AIM-traded firm said the joint parties to PEDL253 had resolved the dispute arising under the joint operating agreement.

It said it had entered into a sale and purchase agreement with Montrose Industries to purchase the further 3% interest in PEDL253 which, following the implementation of the terms of the settlement agreement, would increase its economic interest to 30%.

The consideration for the additional interest was £0.12m, which would be paid from the company’s existing cash resource.

Upon completion of the Montrose acquisition and implementation of the settlement agreement, Union Jack said the interests held in PEDL253 would consist of Egdon Resources UK, the operator, at 35.8%, with Union Jack Oil holding 30%, Montrose Industries at 19.2%, and Humber Oil & Gas at 15%.

“We are pleased to have been offered this opportunity to increase our interest to 30% in Biscathorpe, where a potentially material and commercially viable hydrocarbon resource remains to be tested,” said executive chairman David Bramhill.

“The collective extensive technical information analysed over the past several months, combined with the APT conclusions on the likely presence of good quality oil have materially upgraded the resource potential and economic value of the project, upholding our opinion that PEDL253 remains one of the UK's largest onshore un-appraised conventional hydrocarbon licences.”

Bramhill said that, having retained the wellsite, the joint venture had preserved its optionality to pursue a cost-effective side-track to test the resource potential of the Basal Westphalian Sandstone play, and to appraise the oil column demonstrated in the deeper Dinantian Carbonate reservoir.

“We are pleased that agreement has been reached with Humber, enabling the project now to move forward with full support from all partners.”

At 1150 BST, shares in Union Jack Oil were up 2.38% at 0.19p.