Onshore oil and gas firm Union Jack Oil PLC (LON:UJO) has received a 10% interest in UK Petroleum Exploration and Development Licence (PEDL) 339 from Egdon Resources (LON:EDR) for no upfront cost.
Egdon was formally awarded PEDL339 in the UK 14th Onshore Oil and Gas Licensing Round, and will transfer the 10% interest as part of a farm-out agreement announced in July 2015.
Under the terms of that agreement, Union Jack will pay 20% of the costs of one of the wells – the Louth-1 conventional exploration well – to earn its stake.
The licence is located in the East Midlands on the margins of the Humber Basin and contains a portion of the Louth prospect.
The same prospect falls into PEDL005(R) in which Union Jack also holds a 10% interest.
The operator, Egdon, estimates that the licence contains stock tank oil initially in place (STOOIP) of 5.5mln barrels of oil and gross mean prospective resources of 1.4mln barrels, with an “attractive” 37% chance of success.
A well to test the prospect could be drilled late next year subject to planning approvals and partner consent, Union Jack said.
Assuming the various transfers are approved by the Oil & Gas Association, operator Egdon will hold 65% of the licence, Terrain Energy will hold 15%, while Nautical Petroleum and Union Jack will each hold 10%.
Shares were up 1% to 0.19p.