Union Jack Increases Stake in PEDL241 (North Kelsey Prospect) to 50%
Union Jack Oil Plc has entered into an agreement with its operating partner Egdon Resources Plc to acquire an additional 30% interest in onshore exploration license PEDL241 in the UK, for a total consideration of £100,000. Upon completion, Union Jack will hold an increased 50% interest in the license, with Egdon Resources UK Ltd., a wholly-owned subsidiary of Egdon, retaining a 50% operated interest.
In early 2013, Union Jack had entered into an agreement with Egdon to acquire an initial 10% working interest in the license in exchange for funding 20% of the cost of drilling the North Kelsey well. In addition to the farm in agreement, Union Jack had also entered into a Letter of Intent (LoI) with Egdon pursuant to which the company had an option to enter into a second farm in agreement for a further 5% participating interest in the license under the same terms. Union Jack had until July 31st, 2013, to exercise the option, which it let lapse.
Subsequently, in June 2015, Union Jack and Egdon entered into agreements with Celtique Energie Petroleum Ltd. to acquire its 50% interest in the license, for a nominal consideration. Upon completion of that transaction, Egdon held an increased 80% operated interest in the license, with Union Jack holding 20%.
Under the terms of the current agreement, Union Jack’s previous financial farm-in obligations in respect of the 20% interest in PEDL241 it already holds will now lapse. Further financial obligations will be carried on a 50:50 basis by Union Jack and Egdon.
PEDL241 (Blocks TA0a and TF9a) covers an area of approximately 55 sq. km in the South Humber basin in Lincolnshire, and contains the conventional, drill-ready, North Kelsey prospect, along trend from and analogous to the Wressle oil development. It is situated approximately 10 km south of PEDL180, which contains the Wressle-1 discovery. Work plans on the license include the drilling of a North Kelsey-1 exploration well. Egdon estimates that the gross mean prospective resources associated with the license are approximately 6.47 million barrels of oil (MMbbls).
AIM-listed Union Jack is focused on conventional onshore exploration drilling, development, and investment opportunities in the East Midlands Province of the UK. Egdon is an independent, onshore-focused oil & gas company engaged in the exploration and production of conventional resources in the UK and France, as well as unconventional exploration activities in the UK.
“North Kelsey is a low-cost, drill-ready onshore acquisition for Union Jack in our focus area, consistent with our strategy. The increase in our interest to 50% increases our exposure to this potentially value adding project and expands our balanced drilling and development portfolio. North Kelsey sits within our focus areas of the East Midlands, Humber Basin and East Yorkshire and is on trend with our Wressle oil development project which is on-track to produce first oil later this quarter,” said David Bramhill, Executive Chairman of Union Jack.
“The acquisition of this additional 30% interest has been executed on attractive terms without any promote and will also deliver additional savings by removing our previous farm-in carry obligations. Subject to a successful farm-out process, North Kelsey-1 is expected to be drilled during 2021,” he added.
The transaction is subject to customary closing conditions, including receipt of approval from the UK’s Oil and Gas Authority (OGA).