Union Jack Oil (AIM:UJO) has noted that Egdon Resources is planning on submitting a planning application in relation to the Biscathorpe project by February 2021.
The UK focused onshore hydrocarbon group, which holds a 30% interest in the Lincolnshire licence PEDL253 at the Biscathorpe project, said Egdon, who is the project’s operator, said it intends to submit an application for planning permission on behalf of all partners involved.
The planning permission will propose a side-track drilling operation of the existing Biscathorpe 2 well, associated testing and, in a success case, the long-term production of oil at the site.
A previous detailed technical evaluation by the PEDL253 Joint Venture has identified accessible drilling target areas on the Biscathorpe Prospect, where evidence for a thickened Westphalian sandstone reservoir interval is evident on the reprocessed 3-D seismic.
‘These areas can be targeted by a side-track of the existing Biscathorpe-2 well which was suspended following drilling operations in 2019,’ said Egdon, ‘The proposed side-track will also target the oil column logged in the underlying Dinantian Carbonate in Biscathorpe-2.’
Egdon said its application will be accompanied by an Environmental Impact Assessment, after a screening opinion sought from Lincolnshire County Council (LCC) said it was necessary.
‘A positive screening opinion has been adopted by LCC and as such the planning application will need to be accompanied by an Environmental Statement which integrates a number of specialist reports and assessments. This thorough process will enable Egdon to identify and address any potential environmental impacts arising from the proposed activities,’ it noted.
Egdon told investors that it plans to engage with the local community and statutory consultees via a virtual public consultation event ahead of finalising the submission.
Earlier this year, Union Jack highlighted that economic modelling showed that Biscathorpe was ‘a financially robust project’ even in the current oil price environment. The main Westphalian sandstone target has an estimated un-risked gross NPV(10) of £55.6 million
Meanwhile, the group said break-even full-cycle economics (including all capital costs) were estimated to be (NPV(10) US$18.07 per barrel of oil. It also concluded that future identified drill targets would be accessible via a side-track of the suspended Biscathorpe-2 well.
In addition, a separate 57 metre oil bearing section in the Dinantian Carbonate of Biscathrope-2 represents a secondary target with ‘potentially significant commercial upside.’
Shares in Union Jack Oil have traded within a range of 0.13p and 0.16p in the past two weeks to open 3.85% lower this morning at 0.152p following the announcement.
Reasons to Follow on Union Jack Oil
UJO is an onshore oil and gas exploration firm with a focus on drilling, development and investment opportunities in the UK hydrocarbon sector, and currently holds interests in 13 licences in areas including, inter alia, the East Midlands, Humber Basin and East Yorkshire.
West Newton
The UK focused onshore hydrocarbon explorer holds a 16.665% interest in PEDL183, containing the conventional West Newton A-1 discovery well and WNA-2 appraisal well.
West Newton is located at the heart of the Zero Carbon Humber project area, which aims to promote decarbonising technologies across industrial activities in the wider Humber region.
Last month, it reported that the onshore West Newton B-1 ("WNB-1") well - the next well following the successful West Newton A-2 ("WNA-2") appraisal well - had been spud.
Results from the drilling of WNB-1 are expected to inform a subsequent programme of testing to establish the well's productive capability as well as future drill operations.
North Kelsey
In recent weeks, UJO has also increased its stake in the North Kelsey project by acquiring an additional 30% from Egdon Resources, taking its stake in the exploration project up to 50%.
Further financial obligations will be equal between Union Jack and Egdon Resources, in line with both parties’ 50% stake in the North Kelsey Prospect which is located in Lincolnshire.
The North Kelsey Prospect is a conventional oil prospect along trend from and analogous to the Wressle oil development, which lies around 15 kilometres to the northwest.
The UK- focused group said the prospect has been mapped from 3-D seismic data and has the potential for oil in up to four stacked conventional Carboniferous reservoir targets.
David Bramhill, Executive Chairman of UJO, described North Kelsey as “a low cost, drill-ready onshore acquisition for Union Jack in our focus area, consistent with our strategy.”
He said a further stake in the project increases the group’s exposure to a “potentially value adding project” as well as expanding UJO’s balanced drilling and development portfolio.
Subject to a successful farm-out, North Kelsey-1 is expected to be drilled during 2021.
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