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Union Jack Oil PLC: DEEP DIVE
OVERVIEW

Union Jack Oil builds up strong portfolio of UK assets

The core of the portfolio is in the East Midlands Basin, which includes the Wressle-1 oil discovery,
oil rig
OVERVIEW: UJO The Big Picture
Union Jack likes onshore UK assets
  • 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.

 

How is it doing

David Bramhill, chief executive, explains that Union Jack has 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.

 

What it owns 

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.

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.

 

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."

 

Video

 

 

Inflexion points

  • The West Newton A-2 appraisal well should hit target depth around the end of June. The well is a follow up to a previously drilled discovery well, which yielded a 189bn cubic feet gas equivalent resource in the Kirkham Abbey Shoal formation.
  • With the new well, Union Jack and its partners are targeting Kirkham Abbey and the Cadeby Reef exploration target, which has been estimated to have the potential for 79.1mln barrels of oil equivalent.
  • A public inquiry over the rejection of planning approval for Wressle also starts later this year.
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