Further to the announcement of 6 March 2017, Union Jack Oil plc (Union Jack), a UK-focused, onshore oil and gas production and exploration company is pleased to announce that the Oil and Gas Authority (OGA) has now approved the acquisition by Union Jack of a further 3.33% interest in PEDL180 and PEDL182 from Celtique Energie Petroleum Limited. These licences contain the Wressle-1 discovery.
Union Jack now holds a 15% interest in both licences following completion of this transaction. The consideration for the acquisition was £600,000 (“Consideration”) for the additional 3.33% economic interest. The Consideration, comprising a £60,000 deposit paid to Celtique and a final payment of £540,000 was paid to Celtique’s solicitors in March 2017, the final payment being held in escrow until completion of the transaction.
The Consideration was paid for from monies received in respect of the placing announced on 27 February 2017 of approximately £1.4 million before expenses, with funds raised being used to acquire further interests in assets contained within Union Jack’s existing portfolio of near term production and drill-ready prospects. Further funds resulting from the placing remain to be invested.
Union Jack’s current cash balance is in excess of £2,000,000 and the Company is 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 H2 2017.
PEDL180 and PEDL182 contain 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. Details of the gross and net to Union Jack 2P reserves and 2C resources postacquisition are set out in the table below. Substantial contingent resources have also been confirmed in the Penistone Flags reservoir at Wressle that are over and above the oil and gas reserves identified in the Ashover Grit and Wingfield Flags reservoirs. In addition, PEDL182 also contains the promising Broughton North Prospect.
The interests held in both PEDL180 and PEDL182 are: Egdon Resources U.K. Limited (Operator) 25.00%; Celtique Energie Petroleum Limited 30.00%; Europa Oil & Gas Limited 30.00% *; and Union Jack Oil plc 15.00%.
*On 24 November 2016, Europa Oil & Gas Limited announced that it had agreed to sell a 10% interest in PEDL180 and PEDL182 to Upland Resources Limited which sale is still pending.
David Bramhill, Executive Chairman of Union Jack, commented: “We are delighted to be able to increase further our interest in the attractive Wressle asset to 15%. 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.
At the current oil price, management expects 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.”