Union Jack Oil PLC (AIM:UJO) has entered into a farm-in agreement with Reach Oil & Gas Company Inc, giving the AIM-quoted firm a stake in an upcoming well in Oklahoma.
The junior oil company, in a statement, said it will earn a 45% working interest in the Andrews-1 well, targeting the West Bowlegs prospect in Seminole County, Oklahoma, USA.
It will be drilled in the second quarter and has an estimated 75% chance of geological success, as it targets a known reservoir type – the Hunton Limestone which is a primary hydrocarbon reservoir in Oklahoma.
"The Andrews-1 well has a high chance of success and if proven commercial could be in production within one month or sooner from spudding,” executive chair David Bramhill said in a statement.
“Similar low-cost development wells nearby, typically produce initially at approximately 150 barrels of oil and over 200 thousand cubic feet of gas per day and can provide rapid pay-back within six months.
"The West Bowlegs transaction meets our criteria of acquiring material interests in projects with near-term planned drilling and capable of adding significant cash-flow, while complementing our existing profitable production and development interests onshore UK.”
Bramhill added: “Our strategic partnership with Reach offers Union Jack the opportunity to access a wider portfolio of prospects and drill-ready targets.
"I look forward to reporting to shareholders on this new phase in the growth of Union Jack, further near-term project interest acquisitions and the spudding of the Andrews-1 well in early Q2 2024."
To acquire its stake, Union Jack commits to cover 60% of the drilling costs, which is expected to be around US$516,000.