Union Jack Oil PLC (LON:UJO) has increased its stake in the drill-ready Biscathorpe prospect ahead of an exploration well in mid-2018.
The deal was agreed in tandem with Humber Oil & Gas, a private company, which is teaming up with Union Jack through a new commercial tie-up focused on acquisitions.
It has also raised £1.25mln of new capital in an oversubscribed equity placing.
WATCH: Union Jack Oil increases stake in Biscathorpe prospect ahead of exploration well
"The company is now in an even stronger position to deliver growth in reserves, production and asset value, while adhering to our principles of strict financial and technical discipline,” said David Bramhill.
Union Jack has entered into a new commercial partnership with Humber whereby the two companies will look to co-invest in the UK conventional upstream onshore oil and gas sector.
Humber’s sole director Fraser Lang is a major shareholder in Union Jack, owning around 10% after taking shares in the latest placing.
Acquisition and share placing
Together the two company’s acquired 20% of Biscathorpe (taking a total of 12% from Egdon Resources and 8% from Montrose Industries Limited).
Union Jack’s stake in Biscathorpe increases by 10% to 22%. It doesn’t have to pay anything upfront to acquire the stake, instead it is required to fund its pro-rata share of well costs plus an additional £10,000 per percentage point at the time.
The AIM-quoted company is issuing 1.47bn new shares priced at 0.085p in the placing, which was organised by SP Angel.
Proceeds from the placing are earmarked to cover the group’s expanded drilling obligations for 2018, to support the ongoing evaluation of other projects and for general working capital.
Grateful executive chairman
"We are grateful for the continuing support of our existing shareholders and new investors who have participated in this oversubscribed fundraising,” said David Bramhill, Union Jack executive chairman.
“The funds raised will allow us to acquire an additional 10% interest in PEDL253, on attractive farm-in terms, and progress the drilling of the potentially high-impact Biscathorpe-2 conventional exploration well.
“The fundraising also enables us to progress existing opportunities within the company's portfolio and evaluate further acquisition opportunities, in partnership with Humber.
"We look forward to working with Humber on the Biscathorpe-2 well, and to a constructive and value-adding relationship with them in identifying new accretive acquisition opportunities going forward on which we can work together.”
Meanwhile, Humber’s Frazer Lang added: “We are delighted to be associated with Union Jack, both as a commercial partner and as a 10% shareholder.
“In Humber's opinion, Union Jack holds a highly attractive UK onshore portfolio of conventional producing, appraisal and drill-ready projects and we hold in high regard what the team has assembled.
“We look forward to working with Union Jack and the other joint venture partners on the much anticipated Biscathorpe-2 well as our first joint project together and in evaluating and acquiring other attractive conventional UK onshore opportunities in due course."