Union Jack says Wressle project 'robust' in low oil price market

The AIM-traded firm holds a 27.5% interest in those licences, where gross oil production was expected to be around 500 barrels per day.

It said the operator, Egdon Resources, has updated its economic model for the Wressle oilfield, demonstrating that the project remained economically robust in the current oil price environment, with a cash break-even oil price estimated at $17.62 per barrel.

The forward plan for the Wressle oilfield development consisted of a number of key stages, including discharging the planning conditions, finalising detailed designs, tendering and procurement of materials, equipment and services and finalising all HSE documentation and procedures.

It would then see the installation of the groundwater monitoring boreholes and the establishment of baseline conditions through monitoring, as well as the reconfiguration of the site.

The installation and commissioning of surface facilities would follow, followed by subsurface operations, and finally the commencement of production.

Union Jack said progress to date had concentrated on enabling works, with the initial work on site to be the installation of the groundwater monitoring boreholes, with the main site operations occurring in the last months of the work stream.

On current plans, first oil was envisaged during the second half of 2020.

The company noted that the Wressle oilfield development was granted planning consent on appeal on 17 January.

It said the planning inspector also allowed an application for costs against North Lincolnshire Council, with details subsequently submitted to the council.

“Economic modelling demonstrates that the Wressle oilfield development is robustly economic at current oil prices with a cash break-even oil price estimate of $17.62 per barrel,” said executive chairman David Bramhill.

“The Wressle oilfield remains one of our more advanced development projects within our business, with an expectation of first oil and associated cash flow in the second half of 2020.”

Bramhill said progress on the company’s other key projects, at West Newton and Biscathorpe, was continuing “apace”.

“We look forward to providing further updates on these two additional significant projects in our portfolio in the near future.

“Importantly, with in excess of £6.2m in cash and no debt, Union Jack is funded for all testing and drilling commitments for 2020.”

At 1001 GMT, shares in Union Jack Oil were down 4.25% at 0.077p.