Union Jack Oil has agreed to acquire an additional 30% interest in the North Kelsey project, increasing its stake in the exploration project to 50%.

The agreement includes the acquisition of stake from Egdon Resources UK for a cash consideration of £100,000.

The earlier financial farm-in obligations with respect to the 20% interest in PEDL241 already held by Union Jack would get terminated. PEDL241 is situated within the proven hydrocarbon fairway of the Humberside Platform.

Both the firms will now carry out all further financial obligations at North Kelsey equally, in line with their respective 50% stakes in the project.

The transaction is subject to approval from the UK Oil and Gas Authority.

North Kelsey sits within Union Jack Oil’s focus areas of the East Midlands, Humber Basin and East Yorkshire

Union Jack Oil executive chairman David Bramhill said: “North Kelsey is a low cost, drill-ready onshore acquisition for Union Jack in our focus area, consistent with our strategy. The increase in our interest to 50% increases our exposure to this potentially value adding project and expands our balanced drilling and development portfolio.

“North Kelsey sits within our focus areas of the East Midlands, Humber Basin and East Yorkshire and is on trend with our Wressle oil development project which is on-track to produce first oil later this quarter.”

North Kelsey is seen as an analogue of the Wressle oil field, which lies about 15km to the northwest.

The North Kelsey oil prospect is seen to have the potential for oil in four stacked conventional Carboniferous reservoir targets with estimated resources between 4.66 million and 8.47 million barrels.

In December 2014, Lincolnshire County Council’s Planning and Regulation Committee granted planning consent for the drilling and any subsequent testing of the North Kelsey-1 well.