UK-based onshore oil and gas exploration company, Union Jack Oil (UJO) has entered into an agreement to further acquire 12.5% interest in Wressle hydrocarbon development project from Humber Oil & Gas.

With the acquisition of interest in the licences PEDL180 and PEDL182, Union Jack is planning to increase its interest to 40% in the project.

The acquisition is expected to increase the company’s 2P Reserves and 2C Contingent Resource base at Wressle by 45.5%.

The company said that the Wressle project has strong economics in the current oil price environment with a cash break-even oil price estimated at $17.62 per barrel.

Wressle project has planning approval in place

With the planning approval in place, the project is currently in the development stage.

Union Jack executive chairman David Bramhill said: “This Acquisition is important to Union Jack and increases our interest in Wressle, with production anticipated to commence during H2 2020, from 27.5% to a material 40%.

“The terms of the Acquisition are compelling and this transaction is significantly asset value accretive from the outset, reaffirming Union Jack’s commitment to the development of Wressle and will assist in delivering the Company`s goal to become a mid-tier producer in the medium term.

“The Acquisition has an immediate positive impact on Union Jack by increasing its reserves and resources at Wressle by 45.5% to in-excess of 1,240,000 barrels of oil equivalent.”

Union Jack plans to finance the £500,000 consideration payable to Humber from its existing cash balance.

Gneiss Energy served as financial adviser to Humber in the transaction.

The completion of the stake acquisition is subject to Oil and Gas Authority approval and certain precedents being satisfied.

In April last year, Union Jack Oil commenced the conventional drilling operations at West Newton, located within PEDL183 in East Yorkshire and within the Western sector of the Southern Zechstein Basin.