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LONDON (Alliance News) - Union Jack Oil PLC and Egdon Resources PLC Monday struck a deal concerning the PEDL182 licence that homes the Broughton North prospect in Lincolnshire that will align the interests of all the companies involved in that licence and the adjoining PEDL180 licence.
Union Jack originally acquired a 8.33% interest in PEDL180 back in 2013 and the partners on the licence determined that the Wressle-1 discovery that was made extended into the PEDL182 licence which lies immediately north of PEDL180.
As a result a new deal has been struck which will see Union Jack acquire an interest in PEDL182 which will align the interests held by those involved in both PEDL180 and PEDL182.
Once completed, the four companies involved in the licenses will hold the same amount of interest in both licenses. Egdon will continue to be the operator of both licenses with a 25% stake and Union Jack will hold an 8.33% stake.
Fellow London-listed Europa Oil & Gas Ltd will hold a 33.34% stake in both licenses and non-listed partner Celtique Energie Petroleum Ltd will hold a 33.33% stake.
Union Jack is acquiring that stake in PEDL182 by paying 12.495% of the cost of the future exploration well that will be drilled on the licence to evaluate the Broughton North prospect and pay for associated back costs thought to be around GBP64,000.
Union Jack released its own statement Monday and said those costs would be funded from its share of production from the Wressle field under PEDL180 - which is expected to start in the fourth quarter of this year.
"This acquisition affiliates two prospective licence areas, already demonstrated by the Wressle-1 oil and gas discovery," said David Bramhill, executive chairman on Union Jack. "The company holds cash in excess of GBP2.3 million and remains debt free."
"This farm-out helps to optimise the balance of risk and reward for the Company in exploration of the remainder of PEDL182 where geological risks have been greatly reduced following the Wressle discovery in 2014. We believe that aligning the interests of the parties over the entirety of both PEDL180 and PEDL182 will facilitate the development of the Wressle field and further exploration," said Mark Abbott, managing director of Egdon.
Union Jack shares were up 7.4% to 0.166 pence per share on Monday morning whilst Egdon shares were up 1.1% to 11.62 pence. Europa shares were down 5.0% at 3.80p.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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