Union Jack Oil PLC (LON:UJO) has confirmed the acquisition of a 10% stake in the Biscathorpe project in the South Humber basin, onshore UK.
The deal, which remains subject to regulatory approval, sees Union Jack increase its stake in the project to 22%. At Biscathorpe, the ‘drill-ready’ Biscathorpe well is due to be tested by “around mid-2018”.
READ: Union Jack Oil increases stake in Biscathorpe prospect ahead of exploration well
UJO described Biscathorpe as “a highly attractive, risk-adjusted investment opportunity”. The upcoming Biscathorpe-2 well will address a 14mln barrel prospect, with a 40% chance of geological success.
“Biscathorpe-2 holds considerable upside potential for our company with gross prospective oil resources of 14 million barrels and a high geological chance of success of 40%,” said David Bramhill, Union Jack executive chairman.
“The oil logged in BP's 1987 well, Biscathorpe-1, has significantly de-risked the Biscathorpe Prospect.
He added: “"Union Jack's proprietary economic modelling of the Biscathorpe Prospect highlights its attractiveness and shows a pre-drill value for the success case of circa £24mln net to Union Jack (using the industry standard net present value after tax at a 10% discount rate).
“This is significantly in excess of the approximate £1mln drilling cost we will be incurring, for which we are fully funded following our recent placing.”
Bramhill also highlighted that Biscathorpe is the first project to be supported via it partnership deal with Humber Oil & Gas Limited, which separately has acquired a 10% stake.
“This well, together with the Company's wider portfolio, and the newly-formed commercial partnership with Humber, puts Union Jack in a strong position to deliver growth in reserves, production and asset value, while adhering to our principles of strict financial and technical disciplines," the chairman added.