Today, Union Jack Oil (LSE:UJO) released an update and a drilling timetable regarding iitsBiscathorpe prospect. The company has a 22% interest in the PEDL253 license containing the Biscathorpe asset. Construction of the well-site will be completed during September, with the drilling of the Biscathorpe-2 conventional well expected in October/November 2018. The new well will be used to evaluate the Biscathorpe-1 discovery made by BP in 1987 with mean prospective resources estimated at 14.0 million barrels(MMbbl) gross, 3.1 MMbbl net to UJO.
Planning and Environment Agency permits are in place and the company is keen to highlight that operations at the site will not involve hydraulic fracturing (fracking) for shale gas or shale oil. The Biscathorpe Prospect is a well-defined four-way dip closed structure mapped from modern re-processed 3D seismic and has been given a 40% geological chance of success.
David Bramhill, Executive Chairman of Union Jack, commented:
“The Company`s economic modelling of the Biscathorpe Prospect highlights its attractiveness and shows a pre-drill value for the success case of circa £24 million net to Union Jack. Six months on from entering into a Commercial Partnership with Humber Oil & Gas Limited we have worked together to identify and acquire jointly, several licence interests in what we consider to be potentially high yielding projects. We are optimistic about drilling Biscathorpe-2, which represents the first well drilled in conjunction with Humber.
“Biscathorpe is material to Union Jack and has the ability to transform our Company into a significant UK oil producer. We are delighted that guidance on the drilling timetable has been issued and we look forward to keeping the market apprised of further developments.“
The Union Jack share price has been struggling to get off the ground this year, largely thanks to setbacks with the company’s interests in the Wressle prospect. However, today’s news has given the stock a boost and pre-drill anticipation is likely to build over the next few weeks. The share price has retaken its 50 Day Moving Average (DMA) with strength and is now approaching the 200 DMA.
The stock could now look to target the top of its existing trend channel at around 0.13p, afterwhich, there’s a gap down to fill to 0.145p. There’s a strong support line called upon three times, currently defending 0.08p. Confirmation of this as the bottom of the longer-term trend channel would nail on a higher target price of 0.18p.