Union Jack Oil (LSE:UJO) told investors a workover programme has nearly doubled production at its partly-owned field near Lincoln. The successful workover of two wells at Fiskerton Airfield Oilfield – where the business bought a 20pc stake last November – has increased initial field production from 16bopd to nearly 30bopd.
Union Jack and its partners on the field will carry out further optimisation and operation over the coming months such as increasing the pumping rate to boost production further. Oil production since the workovers completed has now exceeded 1,250 barrels, which is being sold and transported by road tanker to a refinery in North East Lincolnshire.
Today also saw Union Jack provide an update on its 15pc interest in Lincolnshire’s Wressle oil field, which has been plagued by delays and planning permission rejections since the beginning of last year. In January, Union Jack’s share price fell by 22pc after Wressle’s operator Egdon Resources’ appeal against two planning refusals by North Lincolnshire County Council’s Planning Committee was rejected.
Today, Union Jack announced that Egdon applied to extend existing planning consent at Wressle for a further year. It expects the application of a revised field development plan for the site to be submitted next month, explicitly addressing points raised in previous rejections.
To support this, Egdon has drilled two deeper cored groundwater boreholes in addition to those previously drilled. The data produced from these holes will support the creation of revised site design and a hydrological risk assessment. Union Jack’s shares were up 0.9pc to 0.086p following today’s news.
David Bramhill, executive chairman of Union Jack, said: ‘I am pleased to be able to report that our Fiskerton production acquisition is beginning to generate cash flow following recent workovers with gross production now approaching 30bopd. We expect there to be incremental rises in production at Fiskerton as the partners fine tune and learn more about field production and individual well characteristics. The payback time in respect of our investment represents excellent value given the modest entry price. Our share of production at Fiskerton, added to our 20pc interest in the producing Keddington oilfield, all help improve cash flow.
“On Wressle, I re-iterate that the joint venture partners are fully committed to its development, and I am pleased to report progress on a revised development plan application. Wressle remains the “game changer” for Union Jack, and I am sure that the revised application that will address the points raised by the planning inspector resulting from the appeal process will empirically demonstrate the integrity of the revised development plan. A successful outcome from the revised Wressle field development application could see our net production from this development reach 75bopd.
Bramhill added that he is confident Union Jack will become ‘a cash flow positive company in due course’. His comments are supported by the news last month that the firm has increased its interest South Humber Basin oil prospect Biscathorpe by 10pc, bringing its total stake to 22pc. Biscathorpe has gross, mean prospective oil resources of 14m barrels with a 40pc geological chance of success with a well scheduled for drilling at the site in mid-2018.