Big picture - Why invest in Union Jack Oil PLC
Union Jack Oil PLC Snapshot
Simultaneous with this process, the Company’s management expect to continue to use their expertise to acquire further licence interests over areas where there is a short lead time between the acquisition of the interest and either exploration drilling or initial production from any oil or gas fields that may be discovered.
The Company currently has interests in six licences in the East Midlands Basin and one licence in the Weald Basin.
Union Jack remains in negotiation with several established companies to acquire licence interests in suitable projects.
PEDL253 – Biscathorpe
Union Jack holds a 12% interest in PEDL253, located within the proven hydrocarbon fairway of the Humber Basin, on trend with the Saltfleetby gas field and the Keddington oil field which produces from the Upper Carboniferous Westphalian aged reservoir sandstones.
The Biscathrope Prospect is a well defined four way dip closed structure mapped from recent reprocessed 3D seismic. The Biscathorpe structure was initially drilled and tested by BP in 1987 with the Biscarthorpe-1 well which encountered 1.2 metre thick, oil-bearing sandstone of lower Westphalian age with a 24 metre gross sequence. Biscathorpe-2 will be located in a direction towards a potentially thicker sand development within the structural closure of the trap. The sand unit is predicted to thicken away from the crest of the structure and there is also potential for stratigraphic trapping in the west which, if present, could increase the expected total prospective reserves. The same sand unit is the producing reservoir in the Egdon opperated Keddington oil field.
A subsurface location to evaluate the exploration potential of the Biscathorpe Prospect has been defined and a surface drilling location has been identified from which a vertical well to the depth of 2,100 metres can be drilled to test the primary surface objective.
In March 2015, at a Planning and Regulation Committee Meeting of Lincolnshire County Council, planning consent was granted for the drilling and any subsequent testing of the Biscathorpe-2 exploration well.
Biscathrope-2 is planned to be drilled in during 2017.
The mean Prospective Resource volume for the main reservoir objective, a calculated by Egdon, is 17.81 million barrels of oil.
PEDL201 – Burton on the Wolds
In October 2014 drilling operations were completed on the Burton on the Wolds-1 exploration well located on PEDL201 in Leicestershire and the well was plugged penetrating only thin sands in the primary reservoir objective, the Rempstone Sandstone group.
Data received during drilling is now being interpreted in order to evaluate the future prospectivity of the licence. The opportunity to interface the wireline data and fresh cutting samples has been taken and an international consultancy is conducting this work on behalf of the Partnership. This will assist in the quantification of the source rock potential and the unconventional upside that may exist on the licence.
Prior to drilling, in June 2014 industry consultants Molten Limited completed a report commissioned by Union Jack reviewing the shale resource potential within PEDL201.
Molten’s review and analysis was summarised as follows:
Molten calculates the mean deterministic un-risked in place volumes within that shale area of approximately 5.4 billion barrels of oil and over 2.7 trillion standard cubic feet of gas.
Union Jack’s 10% interest of the mean volumes identified would amount to approximately 540 million stock tank barrels of oil initially in place and approximately 270 billion standard cubic feet
of gas initially in place.
Elsewhere in the world, the combination of the technologies of horizontal drilling and hydraulic fracturing has permitted extensive shale developments, most notably in the United States. Although relatively recent in the history of the oil and gas industry, developments such as the Bakken oil play in the US have been producing for over 19 years. Shale oil recovery factors in the US have ranged from approximately 1% to nearly 10%.
If recovery factors even at the low end of those achieved in the US can be achieved in the UK, these volumes would represent significant economic developments.
For more information please click here
PEDL241 – North Kelsey
Union Jack hold a 20% interest in PEDL241 containing the North Kelsey Prospect.
PEDL241 is located within the proven hydrocarbon fairway of the Humberside Platform.
This prospect is a well-defined tilted fault-block mapped from 3D seismic. Based on offset well data, potential exists for up to four separate oil bearing stacked conventional reservoir intervals in the Chatsworth, Beacon Hill, Ravensthorpe and Santon sandstones. The nearby Crosby Warren oil field and the Brigg oil discovery are productive from the Upper Carboniferous Namurian
The gross mean combined Prospective Resources for these multiple objectives, as calculated by Egdon, are estimated to be 6.7 million barrels of oil.
The subsurface target location to evaluate the exploration of the North Kelsey Prospect has been defined and a surface drilling location has been identified from which a vertical well can be drilled.
In December 2014, the Planning and Regulation Committee of Lincolnshire County Council granted planning consent for the drilling and any subsequent testing of the North Kelsey-1 well.
In July 2014 the Wressle-1 conventional exploration well was spudded. The Wressle-1 Prospect was defined on proprietary 3D seismic data acquired by Egdon in 2012, and the well was drilled as a deviated well to a total depth (TD) of 2,240 metres and was designed to intersect a number of prospective Upper Carboniferous age sandstone reservoirs in a structurally favourable position near the crest of the Wressle structure. Pre-drill gross mean Prospective Resources at Wressle as calculated by Egdon were estimated
to be 2.1 million barrels of oil.
The well was logged using measurement whilst drilling (MWD) logging tools run on the drill string. Petrophysical evaluation of the log data indicated the presence of hydrocarbon pay in three intervals.Penistone Flags – up to 19.8 metres measured thickness (15.9 metres vertical thickness)
Wingfield Flags – up to 5.64 metres measured thickness (5.1 metres vertical thickness)Ashover Grit – up to 6.1 metres measured thickness (5.8 metres vertical thickness)
Subsequent to the year end, in February 2015 shareholders were updated on the initial successful Ashover Grit Flow Test which recorded 80 barrels of oil per day (bopd) and 47 thousand cubic feet of gas per day during a 16 hour main flow period.
No appreciable volumes of water were observed. The oil is of good quality with a gravity of 39-40º API.
The next horizon to be flow tested was the Penistone Flags, the last of three hydrocarbon bearing zones identified in the well. The Penistone test produced gas at restricted flow rates of up to 1.7 million cubic feet of gas per day (mmcfd) with associated oil of up to 12 barrels of oil per day (bopd) and no free water from a 9 metre perforated zone at the top of the formation. Gas flow rates were constrained by the equipment and flaring limits imposed by the environmental permit. The gas and oil are of good quality with the oil having a gravity of 35º API.The downhole pressure data recorded during the testing will now be analysed to estimate the gas flow rates that could be achieved under production, unconstrained by the flare and permit restrictions.
A further test was carried out to evaluate the gas-oil and oil-water contacts in the Penistone Flags by perforating the formation deeper in the section. Zone 3a was perforated over a 7.5 metre interval and produced good quality oil with a gravity of 33º API. A total of 98.5 barrels of oil were recovered during the test (of which flow induced by swabbing produced 34.3 barrels of oil). This equates to approximately
77 barrels of oil per day (bopd).
The downhole pressure and oil sample data from all tests will now be interpreted and integrated into an updated field model to inform future development planning.The Broughton North Prospect is located within PEDL182 and has been generated primarily from a high quality 3D seismic data set acquired during 2012. This exercise provided detailed structural data and enabled a bottom-hole target location to be identified for the Brooughton North Prospect.
Union Jack’s share of funding of the Broughton North well will be paid for by hydrocarbon sales from the Wressle-1 commercial production expected to commence in late 2017.The Wressle-1 discovery has significantly reduced the geological risk over PEDL180 and PEDL182 and additionally this transaction will benefit the Company going forward in any “add on” development decisions which may follow once Wressle-1 is in commercial production.
PEDL005(R) is located in Lincolnshire and holds the Keddington oilfield, the Louth and North Somercote prospects.Keddington has produced in excess of 300,000 barrels of oil to date and is currently producing approximately 30 to 35 barrels of oil per day gross with associated gas from two wells, Keddington-4 and Keddington-3Z.
Planning permission is in place for a new appraisal/development well that is currently planned to be drilled as a side-track to the Keddington-4 well in Q4 2015. Should this well be successful, the Board believes that the production rate at the Keddington has the potential to increase to approximately 125 barrels of oil per day gross.On completion of this transaction Union Jack will own a 10 per cent. interest in Keddington and the associated infrastructure and production facilities. Additionally, Union Jack will immediately receive 10 per cent. of all production revenues going forward.
The Operator is seeking to maximise the value of the “Greater Keddington” area through two additional drill-ready prospects located within PEDL005(R) namely Louth and North Somercotes. As part of the Acquisition, Union Jack will obtain a 10 per cent. interest in the Louth and North Somercotes prospects.Under the terms of the Acquisition, Union Jack would also earn a 10 per cent. interest from Egdon in any new licence block awarded to the existing PEDL005(R) joint venture group in the UK 14th Landward Oil and Gas Licensing Round, which contains the mapped extension of the Louth prospect.
The Operator believes that a “Greater Keddington” development plan concept using existing Keddington infrastructure and facilities will enhance the economics of individual exploration prospects and potential in comparison to evaluating them as stand-alone developments.Louth Prospect
The Louth conventional oil prospect is located mostly within PEDL005(R) and extends into the neighbouring currently unlicensed acreage.Located on the margins of the Humber Basin the prospect is defined on reprocessed 3D seismic data and is estimated by the Operator to contain Stock Tank Oil Initially in Place (“STOIIP”) of 5.5 million barrels and gross mean Prospective Resources of 1.4 million barrels with an attractive geological chance of success (“COS”) of 37 per cent.
A well to test this prospect is planned to be drilled in 2016/2017 subject to receipt of planning and other consents.North Somercotes Prospect
Located on the margins of the Humber Basin, the North Somercotes gas prospect is within PEDL005(R) to the north of the Saltfleetby gasfield and is estimated by the Operator to contain gross mean Prospective Resources of 11.0 billion cubic feet of gas. North Somercotes is estimated by the Operator to have a geological COS of 25 per cent.
Keddington Oilfield PEDL005(R)Excluding Keddington
Egdon Resources U.K. Limited 45% 65%
Nautical Petroleum Limited 10% 10%
Terrain Energy Limited 35% 15%
Union Jack Oil plc 10% 10%
David Bramhill, Executive Chairman, 66
Mr Bramhill has over 40 years’ experience in the natural resources industry. Mr Bramhill has directed and managed several energy companies and was the former managing director of OilQuest Resources plc, subsequently acquired by EnCore Oil plc. Mr Bramhill was an executive director at the time of Nighthawk Energy plc’s AIM flotation in March 2007 and a non-executive chairman of Wessex Exploration plc when that company floated on AIM in March 2011. He resigned from these companies in 2010 and 2012 respectively. Mr Bramhill had previously consulted in an engineering capacity for over 20 years on projects for Shell, ExxonMobil, Petrofina, BP and numerous other international energy companies.
Joseph O’Farrell, Executive Director, 65
Mr O‘Farrell has over 30 years’ corporate experience in the hydrocarbon and mining industry. He has managed several energy companies and is a former director of OilQuest Resources plc and Nighthawk Energy plc, having been a director of these two companies at the time of their respective flotations on AIM. He has assisted a number of companies working in conjunction with corporate advisers in pre- IPO fundraising and project acquisition.
Graham Bull, Non-Executive Director, 71
Mr Bull is a geologist with 46 years of international oil and gas industry exploration experience. Following graduation from the University of Leicester in 1968 with a BSc Hons Geology he worked in Canada and held positions with Chevron, Dome Petroleum, Siebens Oil and Gas and Poco Petroleum and also provided exploration expertise to a Canadian drilling fund. He returned to the UK in 1982 taking the position as Chief Geologist to Sovereign Oil and Gas plc. In addition, Mr Bull has operated as a geological adviser for EnCore Oil plc (formerly OilQuest Resources plc), Premier Oil plc, Cirque Energy and DSM Energy. He is currently an exploration geological consultant working on Northwest Europe offshore and onshore United Kingdom and other international areas. Mr Bull is a member of the Petroleum Exploration Society of Great Britain, the American Association of Petroleum Geologists and a Fellow of the Geological Society of London.
Raymond Godson, Non-Executive Director, 73
Mr Godson is a chartered accountant with 40 years experience in the provision of oil and gas related services to energy companies. Mr Godson joined the Rio Tinto group in 1973 where he spent 16 years rising to become the financial and commercial director of the oil and gas subsidiary RTZ Oil & Gas Limited. In 1988 he joined Teredo Petroleum PLC (“Teredo”) where he became the managing director in 1992. Following the takeover of Teredo in 1993, he became a full time accountant in general practice, where the majority of his business has been oil and gas related. Mr Godson acted as Company Secretary for Fusion Oil & Gas plc from IPO to its takeover by Sterling Energy Plc. He was subsequently company secretary for both Ophir Energy Plc and Aurelian Oil & Gas Plc. He is currently an executive director of Montrose Industries Limited, Excalibur Exploration Limited and Trajan Oil & Gas Limited.
9.77% Jim Nominees Limited
8.86% HSDL Nominees Limited
6.24% Barclayshare Nominees Limited
6.04% TD Direct Investing (Europe) Limited
Union Jack Oil plc
6 Charlotte Street
Bath BA1 2NE
Telephone:+44 (0) 1225 428139
+44 (0) 778 7 160682
Fax: +44 (0) 1225 428140
Shore Capital and Corporate Limited,
Bond Street House,
14 Clifford Street,
London W1S 4JU,
Shore Capital Stockbrokers Limited,
Bond Street House,
14 Clifford Street,
London W1S 4JU,
SP Angel Corporate Finance LLP,
Prince Frederick House,
35-39 Maddox Street,
London W1S 2PP
55 Baker Street,
London W1U 7EU,
Computershare Investor Services PLC,
Bristol BS13 8AE,
2 Temple Back East,
Bristol BS1 6EG,
Royal Bank of Scotland,
8-9 Quiet Street,
Bath BA1 2JN,
Public Relations Consultants
Yellow Jersey PR Limited,
Wootton St. Lawrence,
Basingstoke RG23 8PE,