I am travelling north of the border for a few days, will update as much as is possible, maybe at unusual times…
Union Jack Oil
Union Jack has announce, further to its announcement dated 29 January 2024, that the Company has signed a farm-in agreement with Reach Oil & Gas Company Inc, to acquire a 45% working interest in a well planned to be drilled during Q2 2024, to test the West Bowlegs Prospect and in an area of associated interest, located in Seminole County, Oklahoma, USA.
· Andrews-1 well planned to be drilled in early Q2 2024, with a geological chance of success estimated by the Operator (Reach) to be 75%
· Approximate ten-day drilling period to a depth of 5,200 feet
· Completion time is swift; approximately eight days including perforating and flow-back if successful
· Recently acquired proprietary 3D seismic covering the proven producing Hunton Limestone, one of the main hydrocarbon reservoirs in Oklahoma
· Union Jack to pay 60% of costs of the Andrews-1 well to earn a 45% economic interest
· Going forward, the cost of further planned wells will be based on the Company’s 45% economic interest
· Further drill ready prospects covered by 3D seismic identified within interest area earned by Union Jack
· Strategic partnership with Reach offers the opportunity to access a wider inventory of prospects and further drill-ready targets in Oklahoma
· Seismic acquisition and planning costs of US$347,000 are payable by Union Jack
· Cost for drilling and completion of the Andrews-1 well is estimated to be approximately US$516,000 net to Union Jack
· Costs to be paid from existing cash resources
The target for this well is the Hunton Limestone, one of the main hydrocarbon reservoirs in Oklahoma. The Hunton Limestone is unconformably overlain by the main oil-prone source rock, the Woodford Shale and is in an excellent position for the migration of oil. Oil-filled porosity is encountered within a basal Oolite limestone formation in wells within a mile of the first drill location for the Andrews-1 well and this is believed to be the main reservoir within West Bowlegs.
West Bowlegs is associated with a remnant of the Hunton Limestone and is expected to be at original pressure with the seal for the reservoir being the Woodford Shale and lateral seal against the underlying Sylvan Shale.
Primary oil recovery is expected to be by solution gas drive with any gas recovered to surface being sold into the local network.
Reach is an accredited operator in the USA, owning and operating oil and gas production facilities in Seminole and Pottawatomie Counties in Oklahoma. All prospects are generated by Reach which owns modern seismic equipment, supplied by a UK based company Stryde Limited.
Gneiss Energy has acted as financial adviser to this transaction.
David Bramhill, Executive Chairman, commented:
“As indicated in the announcement dated 29 January 2024, I am delighted to be able to announce the execution of the agreement with Reach for our initial near-term drilling operation in Seminole County, Oklahoma.
“The Andrews-1 well has a high chance of success and if proven commercial could be in production within one month or sooner from spudding. Similar low-cost development wells nearby, typically produce initially at approximately 150 barrels of oil and over 200 thousand cubic feet of gas per day and can provide rapid pay-back within six months.
“The West Bowlegs transaction meets our criteria of acquiring material interests in projects with near-term planned drilling and capable of adding significant cash-flow, while complementing our existing profitable production and development interests onshore UK.
“Our strategic partnership with Reach offers Union Jack the opportunity to access a wider portfolio of prospects and drill-ready targets.
“I look forward to reporting to shareholders on this new phase in the growth of Union Jack, further near-term project interest acquisitions and the spudding of the Andrews-1 well in early Q2 2024.”
Miles Newman, Chairman of Reach, commented:
“We acquired the West Bowlegs 3D seismic survey, which is very close to our existing production operations with our state-of-the art Stryde seismic node system and have mapped several interesting prospects.
“Reach is focused on generating drilling opportunities on the US onshore that can benefit from modern 3D seismic.
“We are very pleased to expand our activities with Union Jack onshore US.”
I wrote about this move by UJO very recently and I am sure that it is a very wise diversification and maybe and more importantly, a sensible and rewarding use of revenues coming from other operations.
I think that UJO, in buying such royalties and of course generating cash through drilling wells such as this one, creates enough beta via the incredibly fast return, as if proven up can be on production within one month. The idea of such a thing happening in the UK with our endless red tape and nimbyism is laughable and demonstrates that this move by UJO not only provides a very good return on investment but as it is done so swiftly makes it a smart move.
Scirocco has announced that it has received a letter dated 2 February 2024 from Forest Nominees Limited – which is the legal holder of 78,978,978 shares in the Company which are held as nominee on behalf of G.P. (Jersey) Limited – requesting the Company to convene a general meeting of the Company’s shareholders pursuant to section 303 of the Companies Act 2006.
The Company can confirm it is subject to the requirement pursuant to section 304 of the Act to call a general meeting within 21 days of receipt of a valid requisition (such validity having been confirmed yesterday) and to hold such a general meeting on a date not more than 28 days after the date of the notice convening such general meeting.
The board of directors intends to comply with its obligations in accordance with section 304 of the Act and a circular convening the general meeting will be posted to Shareholders no later than 23 February 2024.
The single proposed resolution relates to a request for the Directors to put in place a strategy to distribute cash proceeds from the sale of assets to shareholders. The full text of the above proposed resolution will be set out in the circular.
As previously stated, the Board continues its review of a range of potential alternatives available to it by which it is able to deliver value to Shareholders, which may include the distribution of available cash, further investments in line with its investing policy and/or the deployment of the proceeds in pursuit of a reverse takeover transaction. The circular will contain an update on the board’s review of these strategic options and voting recommendation.
Shareholders are advised to take no action at this time. Further announcements will be made in due course.
In the process of divesting of assets, Scirocco management has said a number of times that it will listen to the various and competing calls for what to do next. As it repeats above, all options are open to the company and the fact that Forest Nominees have blown the whistle to go into extra time makes a result possible although not necessarily imminent.