The Directors of Union Jack Oil plc (AIM: UJO) are pleased to announce that the Company has agreed terms with Rathlin Energy (UK) Limited (“Rathlin”), a wholly owned subsidiary of Canadian registered Connaught Oil & Gas Ltd (“Connaught”), on a proposed farm-in for a 16.667% licence interest in PEDL183 (“Proposed Farm-in”). PEDL183 is located onshore UK in East Yorkshire and within the Western sector of the Southern Zechstein Basin and contains the significant West Newton A-1 gas discovery (Best Estimate Contingent Resource 189 Bcfe or 31.5 MMboe gross), where the drill-ready West Newton conventional appraisal well is planned to be drilled in Q1 2019.
Proposed Farm-in Highlights
· Acquiring a 16.667% interest in the large 176,000 acre PEDL183 licence containing the significant West Newton A-1 UK onshore gas discovery
· Attractive farm-in terms with no cash costs up front with all funding going towards drilling and licence costs
· Best Estimate Contingent Resources of 189 Bcf of gas equivalent or 31.5 million barrels of oil equivalent (gross) assigned to West Newton in a Competent Persons Report
· West Newton A-1 gas discovery is on-trend with the prolific offshore Hewett gas complex
· Proximity to existing gas pipelines and infrastructure
· Drill-ready conventional appraisal well planned to be drilled in Q1 2019 to appraise the gas discovery
· Compelling immediate and future economic value from a development of the gas discovery alone
· Operator’s NPV10% of US$247 million and 52.5% ROR for the gas discovery alone
· Attractive acquisition metrics of less than US$0.30 per barrel of oil equivalent for the gas discovery alone
· Considerable upside potential from the lower Cadeby Reef oil exploration target underlying the gas reservoir that will also be drilled with Best Estimate Prospective Resources of 79.1 million boe (gross)
· Further significant upside potential from other numerous prospects and leads
· A successful appraisal well in Q1 2019 is expected to deliver a major onshore gas development
Fundraising and Commercial Partner Highlights
· £2.25 million raised before expenses in an oversubscribed Fundraising to fund the Proposed Farm-in and associated well costs
· Union Jack’s Commercial Partner, Humber Oil & Gas Limited (“Humber”), has participated on identical terms in the Proposed Farm-in and will result in it also acquiring a 16.667% interest
· Humber director has a beneficial interest in 13% of the pre-placing issued share capital of Union Jack held by G.P. (Jersey) Limited which has increased its shareholding to 15% of the Company’s share capital as enlarged by the Fundraising
David Bramhill, Executive Chairman of Union Jack, commented:
“The Proposed Farm-in to PEDL183 containing the material West Newton gas discovery represents a significant project technically and is compelling financially for Union Jack and we are grateful for the continuing support of our existing shareholders and new investors who have participated in this oversubscribed fundraising”.
“The funds raised will allow us to acquire a 16.667% interest in PEDL183 on attractive farm-in terms, and progress the drilling of the material West Newton conventional appraisal well, where success is expected to deliver a significant onshore gas development going forward and be transformational for Union Jack.”
“We look forward to working with Rathlin and Humber, drilling the West Newton conventional appraisal well to firm up the project’s significant potential and, upon a successful appraisal well, progress to a field development plan. Union Jack will book 5.3 million barrels of oil equivalent Contingent Resources to its existing reserve and resource portfolio on acquisition and once a field development plan is in place, West Newton’s Contingent Resources can be converted to Reserves.”
“Given our ongoing commitment to develop the Wressle oil discovery, and plans to commence drilling of the material Biscathorpe oil appraisal well during Q4 2018, the Proposed Farm-in and drilling of West Newton in Q1 2019 puts Union Jack in an even stronger position to deliver growth in reserves, production and asset value while adhering to our principles of strict financial and technical discipline.”
Frazer Lang, Director of Humber and Union Jack’s Commercial Partner, commented:
“PEDL183 is one of the largest onshore licences within the UK and we are delighted to be investing in parallel in this project alongside our Commercial Partner, Union Jack.
“The conventional West Newton appraisal well is planned to be drilled in Q1 2019 and, if successful, the effect will be transformational for both Union Jack and Humber.
“As Union Jack’s Commercial Partner, I feel extremely positive about its future and I am also delighted to be beneficially interested in an increased 15% strategic equity investment in the enlarged issued share capital of Union Jack.”