It follows on from the success of the Wressle discovery, where Union Jack has 8.3% of the Egdon led project where production is expected in the near future.
Laughton marks the sixth of Egdon’s onshore UK oil projects that Union Jack has partnered into, all of which involve Egdon and typically have active programmes either ongoing or upcoming.
Union Jack has been badgering Egdon about a taking a stake in the Loughton well for about a year, executive chairman David Bramhill revealed in an interview with Proactive Investors.
And today, just four weeks or so before drilling starts for a well, the company has got its wish.
Like Wressle, Laughton is targeting ‘stacked’ reservoir targets, which Bramhill explains means there will be “more than one shot for our money”.
“We like this kind of play,” he added.
Drilling will get underway in about a months’ time, and so today’s deal adds another potential catalysts for investors.
First there’s the current programme at the nearby Keddington field, where a sidetrack well aims to increase production and profitability from an existing oil field. UJO last year secured a 10% stake in the Egdon operated project back in September.
Meanwhile, Egdon and Europa are working on the field development plan for Wressle. This work could potentially see first production coming in mid-2016.
“That [Wressle] would add a lot of revenue for us, if it went according to plan,” he said.
Previously, a production test in early 2015 achieved aggregated flow rates of 710 barrels oil equivalent from a number of reservoirs, and a subsequent extended well test on specifically on Wressle’s Penistone measured a rate of 180 boepd.
The continued success at Wressle has been a primary focus for investors in Union Jack, and now depending upon the outcomes of Keddington and Laughton there could soon be further interest in the market.
Today’s deal for Laughton will see Union Jack pay 16.67% of the cost of the upcoming well and in return it will receive a 10% economic interest in the project’s conventional resources. Union Jack says it will finance its contribution to the programme from its existing funds.
Earlier today, in a statement, Bramhill, UJO highlighted that Laughton-1 had the potential for discoveries in several reservoirs, and it had previously been estimated that they may contain recoverable resources of 1.3 mln barrels of oil.