Union Jack Oil PLC’s 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 and Yorkshire, which includes Wressle, Biscathorpe and West Newton
What it does
“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.
How it is doing
The latest addition was a 16.667% stake in the West Newton gas discovery in Yorkshire.
The drilling programme at the West Newton project was a highlight of the first half with the company partnered in a successful conventional appraisal well which confirmed a 45-metre gross oil column plus a 20-metre of gas column.
An extended well test programme was recently suspended, temporarily, in order to incorporate the confirmed gas into the development planning.
At Biscathorpe, an assessment was made of the previously-drilled Biscathorpe-2 well with independent consultants Applied Petroleum Technology confirming the presence of a 35-metre live oil column at the top of the Dinantian interval. The evaluation also indicated possible oil pay at the base of the Dinantian.
UJO believes Biscathorpe remains “one of the UK's largest onshore un-appraised conventional hydrocarbon targets.”
At Wressle, the inspectorate gave planning permission to the consortium ruling against North Lincolnshire Council.
The saga began last year when Egdon Resources lodged an appeal against the refusal of planning permission for the drill site from the local council.
Union Jack Oil's key assets
• PEDL 183 West Newton 16.67% ( Operator Raithlin )
• PEDL180 Development Wressle: 27.5% Awaiting development approval (operator Egdon)
• PEDL005(R) Production Keddington: 20.0% Existing production (Egdon)
• PEDL182 Exploration Broughton North: 27.5% Wressle (Egdon)
• PEDL253 Exploration Biscathorpe: 22% (Egdon)
“In addition, Union Jack's 20% working interests in the producing Keddington and Fiskerton Airfield oil fields provide us with oil revenues and exposure to additional workover and drill targets in our focused areas.”
What the boss says: David Bramhill
"West Newton is a near term and potentially high impact project which, if successful would deliver a major UK onshore gas development.
"The well is fully funded from existing cash resources, and in preparation of success, also funded for any long-term gas production test, plus further technical and initial conceptual commercial studies."
What the broker says: SP Angel
SP Angel has a ‘strong buy’ recommendation and has set a 0.7p price target on the stock, which suggests some 360% upside to the 0.15p placing price of the £5mln fundraise completed in November.
“The placing enables Union Jack to progress the technically and financially compelling West Newton project under a planned two well drilling and testing programme for H1 2020 which could add significantly to the earlier successes seen at the A-1 and A-2 discoveries,” analysts said in a note.
“The company also has the necessary funding to complete a seismic acquisition programme over other structures that have been highlighted over the licence area, that could hold significant additional upside potential.”
- Wressle granted planning approval
- Wressle can come on stream at 500 barrels per day
- West Newton has potential to much larger than originally thought
- Oil in place at West Newton is estimated at a base case 146mln barrels
- Best case is oil-in-place of 283mln barrels.