Industry

Loss of Bury Hill Wood pushes Union Jack 2018 deficit over £1m

union jack logoThe onshore oil and gas company, Union Jack Oil has announced a loss of £1.1m in its accounts for 2018, published today. This compares with a deficit of £0.75m in 2017. 

The increased loss is mainly down to “an impairment of an intangible asset”. It follows the refusal of the environment secretary to renew the lease on the exploration site at Bury Hill Wood (also known as Holmwood) in the Surrey Hills near Dorking.

At the time of the refusal, Union Jack had a 7.5% interest in the site.  The annual accounts put the cost to the company of losing the site at £205,308.  In January, Europa, the operator at Bury Hill Wood, put its cost of losing the lease at £1.1m

In April, Union Jack Oil announced it was selling its 7.5% interest in PEDL 143, the licence containing the Bury Hill Wood site, to the new operator, UKOG, in exchange for £112,500 of UKOG shares.

Wressle

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Wressle wellsite, 24 October 2018. Used with the owner’s consent

Union Jack suffered further setbacks during 2018 as two planning applications for the Wressle oil site were turned down by North Lincolnshire Council’s planning committee.

Union Jack has a 27.5% interest in the site, having acquired a further 12.5% interest from Celtique Energy in June 2018.  The £1.04m cost of the acquisition will be paid to Celtique only when Wressle is in commercial production.

In August 2018, North Lincolnshire turned down a request by Egdon, the site operator, to extend planning consent by a year.  Egdon appealed against the decision, and its appeal was upheld in January 2019.

In November 2018, the planning committee refused permission for long-term oil production at Wressle.  The operator has again appealed, and the decision will be made by a planning inspector, following a public inquiry in November, 2019.

Union Jack’s chairman, David Bramhill, said a successful operation at Wressle would have a”transformative economic impact” on the company, bringing it a net cash flow of $3.5 million per annum, assuming oil prices remained at current levels.

West Newton

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West Newton drill site, May 2019.  Photo: DrillOrDrop

In October 2018, Union Jack acquired a 16.7% interest in PEDL 183 in East Yorkshire. This includes the West Newton-A exploration site, operated by Rathlin Energy.  A second well at the site was spudded in April 2019.

In an interview today with Proactive Investors, Union Jack chairman David Bramhill described West Newton as “a big potato” for the company. He said gas reserves in the Kirkham Abbey Shoal formation were valued at a possible $300 million.  There may also be recoverable oil in the deeper Cadeby Reef formation, he said.

Mr Bramhill put the probability of success for the project at 60%. He said:

“There’s always risks, there always will be.  This is exploration”

Biscathorpe

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Biscathorpe oil exploration site, Lincolnshire, 6 January 2019. Photo: Eddie Thornton

In February 2019, Egdon Resources, announced it failed to encounter the oil formation it was targeting at the Biscathorpe well site in Lincolnshire.

Union Jack has a 22% interest in the licence, PEDL253.  In the annual accounts, Mr Bramhill expressed continuing confidence in the site, quoting Henry Ward Beecher, a 19th century American social reformer:

“One’s best success comes after their greatest disappointments”

Mr Bramhill told Proactive Investors that seismic data would be re-processed to see if there was a possible drill target within 2km of the site.

“There’s work to be done, but it’s certainly not on the back burner.  It’s on our front burner.”

Key financial details

Producing fields:  Keddington (20% stake), Fiskerton Airfield (20% stake)
Gross average production from fields (OGA)
Fiskerton Airfield:
  2018 19.3 barrels of oil per day (bopd); 2017 12.0 bopd
Keddington:  2018 21.9 bopd; 2017 22.3 bopd
Revenue: 2018 £165,270;  2017 £46,203
Loss for period: 2018 £1.1m (including Holmwood impairment of  £205,000); 2017 £0.75m
Cash at bank: 2018 £3.1m; 2017 £1.6m
Net current assets: 2018 £6.6m; 2017 £4.4m

4 replies »

  1. Hmm Have these company not got a case for compensation Given they are sold Exploration Licences by the government then later Refused permission by the same government it would appear that the government sold them a Lemon.

    • I would have thought gasman that there should be another site within the licence area that could be utilised. Obviously UKOG still believe that.
      Unless Union Jack could prove different, not much chance with compensation.

  2. Maybe it is the local residents who should seek compensation, it was them who spent their time, energy, money and effort to object to the arrogant offensive and incompetent Europa operators, and their subsequent financial backers and investors.

    It is the local people who should have a case to sue for compensation.

    The site was never in the slightest way suitable for an industrial development in an protected ancient forest on totally unsuitable ancient roads.

    That choice of location was Europa’s own fault and it was that choice that led to their refusal and their demise, indeed the local authority and government were largely complicit in that choice, and that puts them at fault too.

    The age of stupid knows no sense or reason or intelligence, but sense and reason and intelligence did prevail in that case.

    [Typos corrected at poster’s request]

  3. These companies seem to make losses year in year out. Not sure why investors continue to throw their moneys into a black holes like these shale companies

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