Sign up United Kingdom
Proactive Investors - Run By Investors For Investors

Union Jack Oil sees bags of opportunity onshore in the UK

The core of the portfolio is in the East Midlands Basin, which includes the Wressle-1 oil discovery
picture of oil wells
UK remains the place to be for David Bramhill

“The odds are never in your favour.”

That is Union Jack Oil and Gas’ (LON:UJO) executive chairman David Bramhill’s assessment of oil exploration in general, rather than a reference to blockbuster film The Hunger Games.

His philosophy to try to minimise the risks is by sticking to onshore UK assets, where UJO oil has built up a portfolio of stakes between 7.5-20% in a string of licences.

East Midlands the cake, Weald Basin the icing

The core of the portfolio is in the East Midlands Basin, which includes the Wressle-1 oil discovery, a share of production from the Keddington oil field and a raft of drill-ready exploration and appraisal targets.

Union Jack Oil is also involved in the ongoing exploration in the Weald Basin in Sussex, where wells at Horse Hill, Brockham and Broadford Bridge are generating lots on interest, through a stake in the Holmwood licence.

WATCH: Union Jack Oil sizing up new projects as they launch into 'particularly busy' second half

It’s a portfolio he’s pretty comfortable with, Bramhill told Proactive.

“We have a very simple business model. We cherry pick what we think are the nicest deals around and take an interest.

“We like 10% -20% sakes, so if something goes wrong, you haven’t killed the company.”

He reckons with onshore UK there is a 40% - 50% and sometimes even a 60% chance of success unlike offshore, where often he says it is an 8:1 bet.

“And we don’t do 8:1 shots,” he adds.

Closeology is word he uses a lot. Essentially if licences next door are making discoveries, there is a good chance something will found on yours as well

In the Weald Basin, Holmwood (7.5%) is 12km is just a few miles recent discoveries by UK Oil and Gas and Angus Energy, while the East Midlands has been an oil producing address for decades.

Onshore UK an overlooked province

Bramhill believes onshore UK is still relatively unrecognised as an oil province, but offers plenty of opportunity nonetheless.

Though returns may not match those seen offshore, “Onshore can make it happen, big time”, he says pointing to a former company, OilQuest, that eventually was acquired by Premier Oil. Nighthawk Energy and Wessex Exploration are also former stomping grounds.

Currently Wressle’s operator Egdon is navigating through the planning appeal process having had one application rejected earlier this year. If approved, Wressle (15% UJO) is expected to come on stream at 500 barrels per day.

READ: Union Jack Oil expects next six months to be ‘particularly active’

No such problem exists at Biscathorpe where planning permission has been granted for a second well and where Bramhill sees a lot of upside for UJO.

BP originally drilled it in 1987, but the new well will be a few yards further up.

"Hopefully the oil column is a lot thicker here," he adds.

“Every well drilled on trend has come in, so fingers crossed, we are in the right area.”

Indeed he can’t wait for well it to be drilled.

In the meantime, talks are ongoing about the acquisition of some producing assets to add to the modest existing production from Keddington.

UJO raised £1.4mln in February and has cash to fund deals even after its pro-rata commitments on the existing portfolio.

What the broker says

Barney Gray, at joint house broker Turner Pope Investments, wrote recently that Union Jack’s acquisition of additional interests in Wressle, where first production is expected in late 2017, demonstrates the company’s confidence in this development project.

“Coupled with exposure to over 2.0 mmboe of net unrisked prospective resources from upcoming exploration wells on the Holmwood and Biscathorpe prospects, we believe that Union Jack’s balanced portfolio has the potential to deliver valuable accretion to shareholder value over the next twelve months.”

Union Jack Oil's Portfolio (Sep 2017)

  • PEDL180 Development Wressle: 15.0% Awaiting development approval (operator Egdon)
  • PEDL005(R) Production Keddington: 10.0% Existing production (Egdon)
  • PEDL143 Exploration Holmwood: 7.5% Paying 15% of exploration well (operator Europa)
  • PEDL182 Exploration Broughton North: 15.0% Wressle exploration upside (Egdon)
  •  PEDL253 Exploration Biscathorpe: 12.0% Paying 24% of exploration well (Egdon)
  • PEDL201 Exploration Burton on the Wolds: 10.0% Unconventional oil and gas targets (Egdon)
  • PEDL241 Exploration North Kelsey: 20.0% Paying interest of 30% (Egdon)
  • PEDL005(R) Exploration Louth Prospect: 10.0% Paying interest of 20% (Egdon)
  • PEDL339 Exploration Louth Extension: 10.0% Paying interest of 20% (Egdon)
  • PEDL005(R) Exploration North Somercotes: 10.0% Paying interest of 20% (Egdon)
  • PEDL209 Exploration Laughton: 10.0% Further prospects under review (Egdon)
  • Source: Turner Pope
View full UJO profile View Profile

Union Jack Oil PLC Timeline

Related Articles

oil and gas operations
September 14 2018
In the longer term exploration drilling will tell, nonetheless, a near 3bn barrel 'pre-drill' resource is certainly attractive for speculative investors
1519654733_uranium.jpg
February 26 2018
Anfield Energy has a suite of attractive assets containing uranium and vanadium
oil and gas operations
July 24 2018
Prospect S offshore Namibia is Chariot's next shot at a big target, drilling is slated for the fourth quarter this year and it will be closely watched by investors

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2018

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use