TIDMUJO
RNS Number : 5335P
Union Jack Oil PLC
21 June 2022
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR.
21 June 2022
Union Jack Oil plc
("Union Jack" or the "Company")
West Newton PEDL183 Conceptual Development Plan
Union Jack Oil plc (AIM: UJO), a UK focused conventional onshore
hydrocarbon production, development and exploration company, is
pleased to announce details of a conceptual development plan for
West Newton, in which the Company has a 16.665% interest .
Highlights:
-- The Joint Venture partners are progressing with a conceptual
development plan for West Newton as, predominantly, a gas
development project, following completion of the significant work
carried out both internally and scoping exercises and modelling by
independent third-party experts ("Conceptual Development Plan")
-- Encouraging post Extended Well Test ("EWT") technical and financial analysis:
o Indicates the potential for good well productivity from
proposed new horizontal wells, and
o Underpins the strong economic returns of the project
-- Conceptual Development Plan envisages a phased eight well gas
development, which will target recoverable hydrocarbon volumes of
35 million barrels of oil equivalent with a sales gas component of
203 billion cubic feet ("Bcf") and involves:
o An initial five well development drilling campaign, with first
gas anticipated as soon as 2025, modelling plateau production rates
of 44 million cubic feet per day of sales gas
o A further three wells drilled in 2028-2030, to maintain
plateau production of sales gas
o Economic modelling by the Operator calculated a gross pre-tax
NPV(10%) of US$448 million and a pre-tax IRR of 87%, based on
recoverable sales gas and small volumes of associated liquids, for
the development*
o Potential also exists for future gas discoveries within the
Greater West Newton area to be tied into West Newton
infrastructure; not currently included in the modelling
-- The Joint Venture partners intend to drill low-cost wells and
in a manner which phases the development capex cost, significantly
de-risking the financial profile of the project
-- Immediate next steps include:
o Completion of a Competent Persons Report expected in Q3
2022
o First horizontal appraisal well is planned for H1 2023 that
will materially de-risk the project at a modest cost and will then
allow a decision on a field development plan to be taken
A new presentation which details the work completed and the
Company's strategy to deliver production from West Newton can be
found on the Company's website at www.unionjackoil.com
Project Background
Following the results of the EWT programme at West Newton A-2
and B1-Z in 2021, the Company, together with its Joint Venture
partners and third-party experts including RPS and CoreLab, have
worked to understand how to deliver significant commercial
hydrocarbon flow from future wells at West Newton. Following post
EWT analysis, it is now understood that two key issues which
constrained hydrocarbon production during last year's tests were
local formation damage and a lower than anticipated benefit from
the acidisation process, as the acid stimulation used is now
interpreted as only having interacted with a small section of the
perforated intervals.
Crucially, analysis completed by CoreLab demonstrated actual
fluid flow through many of the reservoir samples supporting the
view that optimised development well designs could deliver good
hydrocarbon productivity by drilling horizontal wells. Furthermore,
this has enabled the Joint Venture to formulate a development
concept for the West Newton field based on eight horizontal
production wells and the associated gas and liquid
infrastructure.
In addition, it is estimated that the eight horizontal wells
would recover substantially all the recoverable gas from West
Newton of 203 Bcf, which equates to 25 Bcf of recoverable sales gas
per well. The initial five wells are expected to deliver the
plateau production rate of 44 million cubic feet of sales gas, to
be followed by three wells to be drilled between 2028 and 2030
extending plateau production.
Economic modelling indicates significant cash flow generation
from the first year of production, anticipated in 2025, with
cumulative gross cash flow calculated at circa US$1.3 billion. The
Gross NPV(10%) of the project is modelled to be US$448 million
pre-tax with a pre-tax IRR of 87%.* Initial scoping work indicates
a total pre-production capex of US$139 million for drilling and
completion of the initial five well development, all production
facilities and tie-in to the gas grid with the following three
wells to be drilled to be funded from operating cash flow.
Further, future successful drilling results on follow-on
exploration targets identified within the Greater West Newton Area
(the Spring Hill, Withernsea and Ellerby Prospects) would be
designed to utilise parts of the Conceptual Development Plan's
infrastructure and add significant further potential value to the
West Newton project.
* Based on RPS forecast of UK NPB gas price effective April
2022.
David Bramhill, Executive Chairman of Union Jack commented: "We
are delighted by the results of work completed by RPS Group and
CoreLab and the resulting Conceptual Development Plan, which has
demonstrated West Newton's potential as an extremely valuable gas
development opportunity.
"Located in an area that has access to both significant and
relevant regional infrastructure and, with substantial additional
exploration potential within the wider licence, the Conceptual
Development Plan and a subsequent development decision at West
Newton could deliver substantial volumes of low-carbon sales gas
into the UK's energy market and could also facilitate further
exploration activity and development potential within the Greater
West Newton Area.
" These studies and the resulting Conceptual Development Plan
now see the commencement of an exciting new drilling phase for West
Newton which will see Union Jack drill a high-impact well in 1H
2023 and multiple development wells at West Newton in the coming
years."
Competent Persons Statement
In accordance with the "AIM Rules - Note for Mining and Oil and
Gas Companies", the technical information contained within this
announcement, with the exception of resource figures (compiled by
the Operator), has been reviewed and signed off by Graham Bull,
Non-Executive Director, who has over 46 years of international oil
and gas experience. Graham Bull is a member of the Petroleum
Exploration Society of Great Britain, the American Association of
Petroleum Geologists and a Fellow of the Geological Society of
London.
For further information, contact:
Union Jack Oil plc info@unionjackoil.com
David Bramhill
SP Angel Corporate Finance LLP +44 (0)20 3470 0470
Nominated Adviser and Broker
Matthew Johnson
Richard Hail
Caroline Rowe
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
MSCEBLFLLQLXBBQ
(END) Dow Jones Newswires
June 21, 2022 02:00 ET (06:00 GMT)
Union Jack Oil (LSE:UJO)
Historical Stock Chart
From Mar 2024 to Apr 2024
Union Jack Oil (LSE:UJO)
Historical Stock Chart
From Apr 2023 to Apr 2024