Union Jack Oil PLC (LON:UJO) Executive Chairman David Bramhill caught up with DirectorsTalk for an exclusive interview to discuss their Biscathorpe and North Kelsey planning update and the Widmerpool Gulf and Humber Basin acquisitions
Q1: David, yesterday we saw that you were awarded planning permission at Biscathorpe and North Kelsey, can you just run me through that update?
A1: Of course. That’s really really good news for us because as everybody knows without planning permission, you’re going nowhere, you can’t do anything, you can’t move. So, Biscathorpe has been not on the books to be drilled for a long long time and we’ve been grasping length of this now which is terrific news for us and Egdon and the partners and Humber and Montrose, all really looking forward to this.
The plan is to drill around mid-year, the upside potential is around about 14 odd million barrels of oil recovery which we would have 22% if it happened and the interesting thing is there is also potential for a lot more upside, up to 40 odd million barrels. So, it’s a great play for us, 40% chance of a chance of success so we’re really looking forward to that one.
North Kelsey, a little bit further down the road, and the upside isn’t quite as good, but the chances of success is around 35% as well so these are two wells but Biscathorpe is the key here, this is main one.
Q2: We also saw an update this morning with regards to two acquisitions, what can you tell me about these licenses?
A2: They’re inexpensive for us and they’re part of the disposal plan from Celtique Energie. We see upside in them, we see unconventional upside, and our view is that there’s no budgets for any for the companies to do anything on those licenses at the moment, my understanding is. However, there are some wells being drilled later on in the year, they’ve made quite a lot of headline so that’s got planning permission and they’re ready to drill. Should there be some success there, that’s going to go over onto our licenses and anyone else that holds licenses similar to ours.
So, it’s an investment and we’ve got two that we can either move ahead on them or we can view them as an investment, so we see it as being a very inexpensive part of our inventory with some potentially some excellent upside potential.
Q3: You point out that there is significant upside potential on these investments, what work is needed to prove their commerciality?
A3: When we say commerciality, if we were to drill that is what it would take, however there’s an old saying in the oil ‘closology’ and should there be any drilling close to our licenses and something’s found then that value will percolate through to us very quickly.
Q4: It is a small amount but what is the actual potential return?
A4: The potential return, it’s absolutely impossible. The only thing we can do is to go to Edison, a really really good company, I can recommend these guys, I’ve worked with them in the past, they’ve done a Focus on UK Shale – a Low Cost Option on the 30th April 2018 and it’s well worth a read, it’s in the public domain.
If you take their implications, the value is anywhere between £6.2 million and £22.2 million, ‘should’, and that’s a great big S for should, I’m not saying that it’s worth that now, no it’s not but potentially it could.
So, that’s what we’re looking at and when you consider what we paid, what a great investment, possibly, and low cost going forward as well.
Q5: In terms of timescales for a return, where would you put this?
A5: It’s difficult to say on this one. I’m not hedging but if these wells are drilled later in the year then it could be as soon as this year or it could be next year or the year after, I’m not hedging on that, it’s a good question but it’s difficult
Low cost, there’s hardly any money being spent in the future, it’s an investment so that’s the way we view. We’ve looked at the risk reward ratio, looks good to us and shareholders could benefit on this very small investment.
Q6: As you mentioned, this is your second investment now made with commercial partner Humber Oil and Gas, together do you have your eyes on anything else?
A6: We’re always looking, we screen projects every week, if something comes our way, we take a look. We’re likeminded individuals, likeminded companies and so far, we work really really well together, and we’ve made some good decisions especially on Biscathorpe and we’re always looking.
So, I wouldn’t rule anything out, we’re probably good for them and they’re really good for us. I hasten to add they’re also, or the people involved, major shareholders in Union Jack and they’re really welcome to the scene I have to say.