RNS20 Mar 2018 07:10
20 March 2018
Union Jack Oil plc
("Union Jack" or the "Company")
Farm-in for an Additional 10% Interest in the Drill-Ready Biscathorpe Prospect
Further to the announcement of 5 March 2017, the Directors of Union Jack, a UK onshore focused hydrocarbon production, development and exploration company (AIM: UJO), are pleased to announce that the Company has signed a Farm-in Agreement for a further 10% licence interest in PEDL253 increasing the Company's economic interest to 22%.
Highlights
� Biscathorpe Farm-in Agreement signed, increasing Union Jack's licence interest to 22%, subject to OGA approval
� The drill-ready conventional Biscathorpe-2 well is scheduled to be drilled around mid-year 2018
� Biscathorpe represents a highly attractive, risk-adjusted investment opportunity for Union Jack with gross mean prospective oil resources of 14 million barrels and a 40% geological Chance of Success
� Biscathorpe-2 represents the first project with Union Jack's commercial partner, Humber Oil & Gas Limited ("Humber"), where both parties have acquired a 10% interest
David Bramhill, Executive Chairman of Union Jack, commented:
"We are pleased to be able to further increase our interest in the drill-ready conventional Biscathorpe-2 well to 22% that is planned to be drilled around mid-year 2018. Biscathorpe-2 holds considerable upside potential for our Company with gross prospective oil resources of 14 million barrels and a high geological Chance of Success of 40%. The oil logged in BP's 1987 well, Biscathorpe-1, has significantly de-risked the Biscathorpe Prospect.
"Union Jack's proprietary economic modelling of the Biscathorpe Prospect highlights its attractiveness and shows a pre-drill value for the success case of circa �24 million net to Union Jack (using the industry standard net present value after tax at a 10% discount rate). This is significantly in excess of the approximate �1 million drilling cost we will be incurring, for which we are fully funded following our recent placing.
"We look forward to the drilling of the Biscathorpe-2 well this year. This well, together with the Company's wider portfolio, and the newly-formed commercial partnership with Humber, puts Union Jack in a strong position to deliver growth in reserves, production and asset value, while adhering to our principles of strict financial and technical disciplines."
Farm-in Details
PEDL253 is located in the South Humber Basin and contains the drill-ready Biscathorpe Prospect, where the Biscathorpe-2 conventional exploration well is planned to be drilled around mid-year 2018.
Pursuant to the Farm-in, Union Jack and Humber will each acquire 6% of Egdon Resources U.K. Limited's interest in PEDL253 by paying their pro-rata share of the cost of the Biscathorpe-2 well, plus an additional �10,000 per percentage point