Union Jack and Egdon to buy additional stake in Wressle oil discovery

Union Jack Oil and Egdon Resources have reached agreements to acquire additional interests in PEDL180 and PEDL182 licences, which host the Wressle oil discovery and Broughton North Prospect, from Celtique Energie Petroleum.

While Union Jack will acquire a further 12.5% in the licences, Egdon will buy an additional 5% interest.

Once the deal is closed, Union Jack and Egdon will own 27.5% and 30% interests, respectively.

Under the terms of the agreement, Union Jack is not required to make an initial payment to Celtique.

The company will pay £1.04m for the interest subject to establishing first commercial oil production at Wressle.

Union Jack Oil executive chairman David Bramhill said: “The acquisition has an immediate positive impact on Union Jack by instantly increasing its reserves and resources base by 83% to in excess of 855,000 barrels of oil equivalent.

“The justification for Union Jack acquiring an additional interest in Wressle is the transformative economic impact to the company, as we believe that when commercial oil production at Wressle is established, it would provide Union Jack with cash flows of approximately $4m per annum in the current oil price environment.

“After taking operating costs into consideration, that are estimated to be below $15 per barrel, such net revenues would propel Union Jack into a material revenue-generating oil and gas production company.”

In a separate development, the company’s commercial partner Humber Oil & Gas has agreed to acquire a 12.5% interest in the licences from Celtique.

In exchange for the sale of its 30% stake, Celtique will receive a total deferred consideration of £2.5m from the three companies.

In April, an application was submitted to the North Lincolnshire Council to seek a one-year extension for the existing planning consent.