Union Jack Oil PLC (AIM:UJO, OTCQB:UJOGF) struck a deal with its exploration partner, Reach Oil and Gas, to acquire a 60% working interest in the Sark well in central Oklahoma.
To earn into the project, UJO agrees to pay an 80% share of the Sark well costs – the total net well costs are provisionally estimated at around $1.1 million.
Sark is slated to be drilled early in the third quarter. The well will target the Hunton and Wilcox formations, with some 1.44 million barrels of recoverable resources estimated, plus 1.5 million barrels of upside potential.
If successful, Union Jack noted the project could be worth some $10.9 million (net present value estimate). The chance of success is stated to be 65%.
UJO executive chair David Bramhill described it as “another material oil development project”.
He added that the small-cap oiler has the impetus to invest in new projects in the United States, specifically in Oklahoma, thanks to its success with the Moccasin project (also a Reach-partnered venture).
“Union Jack is now entering into a period of sustained activity in Oklahoma, where we have every reason to be confident following the Board`s decision to expand operations into the USA,” Bramhill said in a statement.
The UJO chair added: "Sark is the next welcome addition to our rapidly growing portfolio of activities in Oklahoma and follows the successful oil discovery at Moccasin, where such play types are now designated a high chance of success.
"In just over 15 months, the company has drilled four consecutive discoveries and compiled a portfolio of what we believe to be dynamic projects, forming the foundations of a second valuable commercial business in the USA, complementing our sound and profit-making revenues from Wressle in the UK.”