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Union Jack Oil acquires UK shale exploration stakes

It is the group's latest low-cost acquisition onshore UK.

oil and gas operations
The stakes are being held as investments

Union Jack Oil PLC (LON:UJO) has acquired a stake in two potential UK shale projects, with a minimal upfront investment.

The company and its investment partner Humber Oil & Gas Limited have agreed to each acquire 16.25% in the PEDL201 licence, in the ‘Widmerpool Gulf’, as well as 12.5% stake in the PEDL181 asset in the Humber basin.

Union Jack already held a stake in PEDL201 and its position now increases to 26.25%.

READ: Union Jack Oil shares boosted on Biscathorpe-2 and North Kelsey-1 extensions

The explorer and Humber will initially invest £7,500 into the licences and, at present, there are no immediate capital programmes planned for either.

The areas are presently seen as prospective for both gas and oil unconventional hydrocarbons, but, as yet there haven’t been any discoveries in the licence areas.

Based upon an analyst’s broad per-acre valuation for UK shale in the region, the company estimated a potential value of between US$6mln and US$22mln – though this would be subject to future exploration success and project consents.

"Union Jack will hold these licences as an investment given the board's view that they both have significant value upside given the potential for future unconventional oil and gas exploration activities in the UK onshore,” said David Bramhill, Union Jack executive chairman.

"While further work will need to be undertaken by the onshore oil and gas industry in the UK to prove the commerciality of unconventional oil and gas projects, the transaction value ranges proposed by Edison provide an encouraging valuation indicator and supports Union Jack's confidence that the risk/reward balance of these investments is favourable to our shareholders."

Quick facts: Union Jack Oil PLC

Price: 0.16 GBX

AIM:UJO
Market: AIM
Market Cap: £24.71 m
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