Union Jack Oil soars as potential is confirmed at East Middlands licence

Oil and gas well detail profiled on blue sky with clouds
Source: DollarPhotoClub

The shares of the UK-focused oil and gas exploration and development company, Union Jack Oil PLC, soared on Monday morning after the company said estimates at its part-owned PEDL201 licence have confirmed “significant shale oil and gas potential”.

The report, carried out by Molten Limited, has shown mean gross unrisked estimates of 5.4 billion barrels of oil and over 2.7 trillion standard cubic feet of gas in the region. This means that even if the recovery rates are at the low end of those achieved in the US, the volumes would have significant value. Having said that, the company was cautious as to whether any of the resources would be commercially producible.

“No shale oil or gas production has yet occurred in the UK, therefore Molten has not attempted to risk the in place volumes nor attempted a valuation of the shale prospect,” the statement issued by the company said.

The PEDL201 licence in the UK Midlands, in which Union Jack Oil holds a 10 per cent interest while Egdon Resources PLC holds 32.5 per cent, is thought to contain a large thickness of Upper and Lower Bowland shale, which Molten believes are likely to be primarily oil-bearing.

The company recognises the increasing interest investors show in shale oil and gas exploration, although for now the company will concentrate on conventional exploration with the Burton on the Wolds-1 well, located in the southern half of PEDL201 – outside of the shale-heavy Widmerpool Gulf.

“The company’s immediate priority remains to unlock the conventional exploration potential within our current licence interests. We look forward to the imminent drilling of two exploration wells, Wressle-1 and Burton on the Wolds-1, both targeting conventional reservoir objectives,” Executive Chairman David Bramhill said in a statement.

This does not mean that the company is disinterested in unconventional energy resources.

“Unless you’re prepared, you’re going to be left in the stalls. Everybody’s got an appetite for it” said Mr Bramhill, adding “The board of directors considered it prudent to have the company’s interest in PEDL201, where there is known shale potential, independently reviewed to identify the unconventional resource potential.”

“This exercise has proved to be very worthwhile with compelling in place un-risked scoping volumetric estimates for both shale oil and shale gas.”

The company also declared that it plans to be involved in the bidding process for interests in new UK drilling sites when the 14th licensing round is announced by the Department of Energy and Climate Change later this year.

Union Jack’s stock was 40% higher at 0.433p by 08:12.

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