Union Jack Oil plc (LON:UJO), an oil and gas producer, has announced a significant acquisition in Oklahoma, securing a 45% interest in the Rogers Project. This strategic move is aimed at bolstering the company’s portfolio in the United States.
The Rogers Project, consisting of two production wells and the Coker water injection well, is anticipated to hold gross oil resources of 0.124 million barrels (mmbbl). Union Jack Oil has partnered with Reach Oil & Gas for this acquisition, a company they are already allied with on other U.S. assets. The acquisition is situated merely 2km from Union Jack’s existing West Bowlegs asset.
Union Jack Oil will pay $105,000 for its share in the Rogers Project, with an additional expenditure of approximately $133,000 for its pro-rata share of the 2024 capital expenditure (CAPEX). The 2024 CAPEX is expected to focus on production enhancement activities, including the establishment of water injection at the field. The company estimates that the remaining gross volumes at Rogers are around 0.124mmbbl.
Daniel Slater, CFA, an analyst at Zeus Capital, commented on the acquisition, stating, “This latest acquisition is a further building block in Union Jack’s growing USA portfolio. We would expect Rogers to add additional, incremental production volumes for Union Jack, for overall acquisition and CAPEX costs well within the company’s capabilities. We would also hope that there could be an element of operational synergies with the other assets in Union Jack’s Oklahoma position.”
Slater added, “Overall, we are pleased to see Union Jack continuing to build its asset position onshore USA. There are clearly opportunities for the company here, from new drilling and production volumes, through to more of the same via new acquisitions. This is continuing to provide balance to the UK element of the company’s portfolio, allowing it to redeploy cash and diversify risk.”
Union Jack’s latest move follows its recent success with the Andrews 1-17 well at West Bowlegs, which continues to stabilise production. The well has peaked at flow rates of 100 barrels per day (bbl/d) gross. Plans are underway to install a permanent electricity supply and an upgraded pump jack to target higher flow rates. Additionally, preparations for the spud of the Andrews 2-17 well are in progress, which could further enhance production rates.
In the UK, Union Jack’s portfolio includes a 40% stake in the Wressle field, which began production in 2021. Significant revenues from Wressle are being redeployed to support other projects, including the recently acquired interests in the Permian Basin in Texas, the Williston Basin in North Dakota, and additional assets in Oklahoma.
The company’s strategy to expand its U.S. footprint is supported by a robust financial position, with a cash holding of £6.7 million as of the end of 2023 and no debt. Slater’s outlook for Union Jack is positive, with expectations of increased news flow from the U.S. operations and continued portfolio diversification.
As Union Jack continues to grow its onshore U.S. presence, stakeholders can anticipate further updates on production rates and potential new acquisitions. The company’s diversified approach aims to balance its U.S. and UK portfolios, reducing risks and capitalising on new opportunities across its asset base.
About Union Jack Oil
Union Jack Oil plc is an onshore oil and gas exploration company with a diversified portfolio of production, development, and exploration assets in the UK and USA.
Disclaimer: This article is intended for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with a professional financial advisor before making any investment decisions.
