LONDON, UK: Union Jack Oil plc, a UK and USA focused onshore hydrocarbon production, development and exploration company, has announced that it has signed two farm-in agreements with Reach Oil & Gas Company Inc in Oklahoma, USA.
The first deal gives Union Jack a 75% stake in a well that will test the Footwall Fold Prospect in the Wilzetta Fault play, a high-relief compressional fold with a large reverse fault. The well is expected to be drilled in Q3 2024, with a 35% chance of success and a potential of more than 200,000 barrels of recoverable oil.
The second deal gives Union Jack a 37.5% stake in a seismic programme that will identify additional drillable prospects along the Wilzetta Fault, a prolific oil-producing zone in central Oklahoma. The programme will involve 2D and 3D seismic surveys at the most promising sites.
Union Jack will pay US$557,000 for the two deals, which will be funded from its existing cash resources. The company said the deals are in line with its strategy of acquiring low-risk, high-reward assets in the USA.
David Bramhill, Executive Chairman of Union Jack, commented: “Further to the announcements made on 29 January 2024 and 6 February 2024 in respect of Union Jack’s transactions with Reach, I am pleased to be able to bring another two, highly prospective farm-in projects to the Company’s Oklahoma, USA, drilling and Mineral royalty portfolio.
“During late 2023 and early 2024, the Company assembled an initial balanced collection of value adding assets, comprising three cash yielding Mineral royalties, holding attractive upside potential, and a quality portfolio of near-term, exploration, drilling and seismic acquisition programmes that we believe have an excellent chance of success.
“We expect to see the first of our wells, being the Andrews-1 on the West Bowlegs Prospect, drilled in early Q2 2024 and we are pleased to see good progress already being made with the well location staked and site construction to commence shortly.
“Reach has also informed Union Jack that an intent to drill was submitted to the Oklahoma Corporation Commission on 8 February 2024 and that permit approval can typically be expected within 14 days.
“The Andrews-1 well will be followed by a high-impact well on the Wilzetta Fault later in 2024, where the potential rewards are significant.
“Typical wells drilled on the Wilzetta Fault can produce approximately 250 barrels of oil a day providing pay-back within three months.
“The Board is delivering on its aims of identifying and introducing potential new growth opportunities in a welcoming jurisdiction, that is highly prospective, has existing operations and infrastructure accompanied with an attractive fiscal environment, to complement the Company’s already successful and profitable production activities in the UK.
“In the UK, we have planned programmes, which include the drilling and development of the Penistone Flags formation, containing material gas reserves on our flagship Wressle development. We also anticipate the “renaissance” of the West Newton gas project, which I am confident will become the focus of significant drilling and development activity during 2024 and beyond.
“Meanwhile, I also look forward to reporting on progress on Union Jack’s expanded portfolio in the USA and the continuing success of the Company.”
Jim McKenny, President of Reach, commented: “The Wilzetta Fault is a proven oil producing area with potential for the discovery of substantial reserves in a complex structural setting.
“We are thrilled to have Union Jack as a partner in our expanding, seismic driven exploration programme.”
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