Drilling work has begun at the Keddington oil project, in Lincolnshire, where an existing conventional well is being side tracked.
Egdon Resources (LON:EDR) is the operator, with a 45% stake, while Union Jack Oil (LON:UJO) has a 10% interest in the project which aims to increase production and profitability from the Keddington field.
The new well, Keddington-5, is designed to test an area where the targeted sandstone reservoir has not been produced. It is estimated that it will access between 309,000 and 566,000 barrels of in-place oil.
The work programme is expected to last until early February.
"We are pleased to report the commencement of drilling operations at Keddington-5 and look forward to the potential for increased production and profitability from this mature field," said Mark Abbott, Egdon managing director.
Union Jack agreed the acquisition of its 10% stake in Keddington back in September. The terms of that deal sees the AIM quoted group paying 20% of the Keddington-5 costs.
David Bramhill, Union Jack executive chairman, said: "Union Jack, with over £3 million of cash and debt free, will continue to participate in attractive projects such as Keddington that offer realistic chances of success and the opportunity to add to its asset base at moderate cost."