Union Jack Oil has received written consent from the Oil and Gas Authority, satisfied all conditions precedent, and has now completed the farm-in with Rathlin Energy UK for a 16.665% licence interest in PEDL183, it announced on Monday.
The AIM-traded firm said PEDL183 contained the “significant” West Newton A-1 UK onshore gas discovery.
It reported best estimate contingent resources of 189 Bcf of gas equivalent, or 31.5 million barrels of oil equivalent gross, as being assigned to the West Newton A-1 discovery in a competent persons report.
A drill-ready conventional appraisal well was planned to be drilled in the first quarter of 2019, fully funded from existing cash resources.
Operator's net present value at a 10% discount rate was put at $247m, with a 52.5% rate of return for the gas discovery alone.
Union Jack reported “attractive” acquisition metrics of less than 30 US cents per barrel of oil equivalent for the gas discovery.
It also spoke of “considerable” upside potential from the lower Cadeby Reef oil exploration target underlying the gas reservoir, which would also be drilled, with best estimate prospective resources of 79.1 million barrels of oil equivalent gross.
“We are pleased to complete the Farm-in to PEDL183, containing the material West Newton gas discovery that represents a significant and compelling project for Union Jack,” said Union Jack Oil executive chairman David Bramhill.
“The drilling of the West Newton conventional appraisal well is currently planned for the first quarter of 2019 and will follow the planned commencement of drilling of the conventional Biscathorpe-2 appraisal well on PEDL253 by year end 2018 in which Union Jack holds a meaningful 22% licence interest.
“Both wells are fully permitted and success at either would deliver a material onshore gas or oil development project respectively, with either being transformational for Union Jack.”
Bramhill said the completion of the West Newton Farm-in put the company in a stronger position to deliver growth in reserves, production and asset value, while adhering to its principles of strict financial and technical disciplines.
“We look forward to keeping the market updated on the impending commencement of drilling of the high-impact appraisal wells at Biscathorpe-2 and at West Newton.”