Union Jack Oil is spending £1m to become the largest investor in the Biscathorpe oil licence in Lincolnshire.

A statement from the company this morning said it had reached agreement to acquire Humber Oil & Gas Limited’s 15% stake.

If approved, this would take Union Jack’s total interest in the licence, PEDL253, to 45%.

The other investors are the licence operator, Egdon Resources UK Limited, which holds 35.8%, and Montrose Industries Limited (19.3%).

Egdon confirmed this month that it was preparing a planning application for drilling and testing a new sidetrack well and long-term production at Biscathorpe. Today’s statement suggested that the application would be submitted to Lincolnshire County Council next month (February 2021). Egdon has also said it may seek a partial farm-out at the site.

This is the second increase in the past year in Union Jack’s interest in Biscathorpe. In June 2020, the company bought 3% of the Montrose stake.

Under today’s deal, Union Jack said it would pay £500,000 to Humber Oil & Gas on approval from the Oil & Gas Authority of the transfer of interest. A further £500,000 would be paid if Lincolnshire County Council approved the planning application.

Union Jack said geochemical analysis at Biscathorpe by Applied Petroleum Technology (APT) concluded there was a hydrocarbon column of 33-34 API gravity oil, a light crude oil, in the Dinantian Carbonate formation.

David Bramhill, Union Jack executive chairman, said:

“The collective extensive technical information analysed over the past months, combined with APT’s conclusions on the likely presence of good quality oil, have materially upgraded the resource potential and economic value of the project in our view, further supporting our opinion that PEDL253 remains one of the UK’s largest onshore un-appraised conventional hydrocarbon licences.”