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Union Jack Oil steadily adding UK onshore assets

The core of the portfolio is in the East Midlands Basin, which includes the Wressle-1 oil discovery, a share of production from the Keddington oil field and a raft of drill-ready exploration and appraisal targets

oil rig
Union Jack sticks to UK onshore
Union Jack Oil PLC’s (LON:UJO) philosophy is to try to minimise the risks of oil and gas exploration by sticking to onshore UK assets.
 
Using this strategy, it has built up a portfolio of stakes between 7.5%-20% in a string of licences.
 
The core of the portfolio is in the East Midlands Basin, which includes the Wressle-1 oil discovery, a share of production from the Keddington oil field and a raft of drill-ready exploration and appraisal targets.

WATCH: West Newton farm-in has 'all the right ingredients' - Union Jack Oil's David Bramhill

The junior is also involved in the ongoing exploration in the Weald Basin in Sussex, where wells at Horse Hill, Brockham and Broadford Bridge are generating lots of interest, through a stake in the Holmwood licence.
 
It’s a portfolio he’s pretty comfortable with, chief executive David Bramhill told Proactive last year.
 
“We have a very simple business model. We cherry pick what we think are the nicest deals around and take an interest.
 
“We like 10% -20% stakes, so if something goes wrong, you haven’t killed the company.”
 
He reckons with onshore UK there is a 40% - 50% and sometimes even a 60% chance of success unlike offshore, where often he says it is an 8:1 bet.
 
“And we don’t do 8:1 shots,” he adds.
 
The latest addition is a 16.667% stake in the West Newton gas discovery in Yorkshire.
 
In an immediate boost, planning permission for the West Newton-A wellsite in Yorkshire was extended just a couple of weeks after the purchase completed.
 
The stake in West Newton was acquired as part of a deal with Rathlin Energy, a subsidiary of Canadian firm Connaught Oil & Gas.
 
The discovery is located onshore UK in East Yorkshire, within the western part of the Southern Zechstein Basin, and contains an estimated contingent resource of 189bn cubic feet of gas equivalent or 31.5mln barrels of oil equivalent.

Appraisal well next year

The West Newton appraisal well is planned to be drilled in the first quarter of 2019, with planning permission for the conventional well already in place.
 
Through the farm-out, UJO is committed to cover 25% of the cost of the appraisal well.
 
The transaction does not include any upfront fees, though UJO said it expects its share of the appraisal well will cost around £4.6mln.
 
It is a conventional operation, and the company highlighted that it will not involve fracking either now or in the future.
 
West Newton follows a busy 2017, when the company expanded its portfolio with ‘selective, value accretive asset transactions’ – taking additional interests in the Wressle and Biscathorpe assets – and it increased both oil resources and reserves.
 
Oil output volumes increased additionally, with the acquisition of interests in the producing Fiskerton Airfield and Keddington oilfields.

Union Jack Oil's Portfolio (Oct 2018)

• PEDL 183 West Newton 16.67% 

• PEDL180 Development Wressle: 27.5% Awaiting development approval (operator Egdon)

• PEDL005(R) Production Keddington: 20.0% Existing production (Egdon)

• PEDL143 Exploration Holmwood: 7.5% Paying 15% of exploration well (operator Europa)

• PEDL182 Exploration Broughton North: 27.5% Wressle (Egdon)

• PEDL253 Exploration Biscathorpe: 22% (Egdon)

• PEDL201 Exploration Burton on the Wolds: 10.0% (Egdon)

• PEDL241 Exploration North Kelsey: 20.0% 

• PEDL005(R) Exploration Louth Prospect: 20% (Egdon)

• PEDL339 Exploration Louth Extension: 20% (Egdon)

• PEDL005(R) Exploration North Somercotes: 20% (Egdon)

• PEDL209 Exploration Laughton: 10.0% (Egdon)

• PEDL118: Dukes Wood 16.67% (Egdon)

• PEDL203: Kirklington 16.67% (Egdon) 

• PEDL181 Humber Basin 12.5% (Europe Oil) 

• PEDL201: Widmerpool Gulf 26.25% (Egdon) 

Quick facts: Union Jack Oil PLC

Price: 0.1525 GBX

AIM:UJO
Market: AIM
Market Cap: £23.55 m
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