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Union Jack Oil's shares jump after 12.5% acquisition in Wressle discovery
Shares in onshore hydrocarbon production, development and exploration company Union Jack Oil jumped on Monday after the company said it had acquired a further 12.5% in the PEDL180 and PEDL182 licences in North Lincolnshire.
The licences are home to the Wressle discovery and the Broughton North prospect, and the acquisition will see Union Jack pay £1.04m once commercial oil production is established.
The company's total interest in the licences is now at 27.5%.
Executive chairman David Bramhill said: "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."
The acquisition has increased the company's reserves and resources base by 85% to over 855,000 barrels of oil equivalent, according to Bramhill.
"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," said Bramhill.
The company has cash reserves of £2m and is fully funded for the year's existing drilling commitments.
At 1100 BST, Union Jack Oil's shares were up 4.76% at 0.11p.