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(Sharecast News) - Onshore production, development and exploration company Union Jack Oil announced the acquisition of an additional 35% economic interest in the PEDL005(R) licence on Monday, which contains the producing Keddington oilfield, from Terrain Energy.
The AIM-traded firm said that, following completion, it would hold a 55% economic interest in Keddington, with the operator Egdon Resources holding the remaining 45%.
It said its net contingent resource would increase to 311,000 barrels of oil, while its net prospective resource would rise to 349,250 barrels of oil.
Union Jack said there was the potential to increase production volumes "multi-fold" via a "relatively inexpensive" side-track well.
The consideration for the acquisition was ?0.2m, and in addition, Union Jack had assumed costs of ?35,000 in relation to site activities from the effective economic date of the acquisition, being 1 January.
It said the cost would be financed by existing cash resources.
The company would receive its increased share of Keddington production proceeds from the economic date, and the acquisition remained subject to approval by the Oil and Gas Authority.
"This acquisition is an inexpensive transaction and provides an immediate uplift in oil production, which will have a beneficial effect when consolidated into the production revenues generated from Fiskerton Airfield and the expected 'first oil' from the Wressle development later in the year," said executive chairman David Bramhill.
"Keddington also contains major scope for expansion which could be achieved by drilling a relatively inexpensive development well from the existing Keddington site."
Bramhill said Union Jack's other key projects remained on track, with news expected during the remainder of the first and second quarter from the extended well test at the West Newton A-2 discovery, as well as the start of site works in preparation for the drilling of the West Newton B-1 well, and an update on the achievement of first oil from the Wressle discovery during the second half of 2020.
Union Jack was also looking towards an update on Biscathorpe, where "significant" technical work had been undertaken to fully assess what the company said could become a "significant project" for the joint venture going forward.
"The company continues to exercise strict financial discipline and is fully funded to cover all planned drilling and development commitments at West Newton, Wressle and Biscathorpe.
"I look forward to reporting to shareholders in respect of progress of our principal projects in the near term."
At 1015 GMT, shares in Union Jack Oil were down 8.62% at 0.12p.
9 May 2016 15:03