Final consent had not yet been granted for the stimulation of the Wressle oil well in North Lincolnshire, Union Jack Oil confirmed today. But the company announced that tests on wells at two West Newton sites in East Yorkshire were expected soon.

In its company accounts for 2020, Union Jack said the Wressle well, in which it has a 40% stake, had been placed on a continuous production test after re-perforation through the Ashover Grit formation.

Union Jack said:

“The well test results to date are in line with expectations and consent for a proppant squeeze in respect of the next stage of operations is awaited.”

A proppant squeeze involves the injection of fluid and proppant, such as sand, into the rock formation to improve the flow of hydrocarbons.

The Environment Agency regards it as a form of low-volume fracking because the injection pressure is high enough to fracture rocks.

But proppant squeeze is not covered by the moratorium on hydraulic fracturing in England because it does not use the specified volume of fluid (1,000m3 of fluid per fracturing stage or 10,000m3 of fluid during the whole fracking process).

The process needs a hydraulic fracturing plan (HFP), which outlines what an operator would do to minimise the risks of earth tremors from fracking. It also states how the hydraulic fracturing process would be monitored and controlled.

The HFP must be approved independently by both the Environment Agency (EA) and the Oil & Gas Authority. The Health and Safety Executive also has a chance to comment.

In January 2021, the Environment Agency confirmed that the Wressle HFP, submitted by the site operator, Egdon Resources, was still “in draft”. Since then, there has been no public information about the plan.

At optimum production levels, the Wressle-1 well has been projected to produce at a gross rate of 500 barrels of oil per day (“bopd”). If accurate, this would give Union Jack 200 bopd from the well.

Union Jack’s total production in 2020 was an average of 50 barrels of oil per day from from two fields: Keddington and Fiskerton Airfield.

Update

On 18 May 2021, Union Jack announced that all necessary consents for the Wressle proppant squeeze had been received. DrillOrDrop report

West Newton tests

Union Jack also announced that tests were expected soon on the West Newton B-1z and A2 wells, operated by Rathlin Energy:

“The imminent well testing programme is the next important milestone in determining the development potential of West Newton.”

The B-1z well was drilled in November 2020 to a depth of 2,114m.

It confirmed a gross hydrocarbon saturated interval of 118m in the Kirkham Abbey formation. No water has yet been encountered and a good cement bond had been confirmed in the production liner, the accounts reported.

Union Jack’s chairman, David Bramhill, said:

“All the results to date continue to support our belief that West Newton is a large scale, conventional onshore oil and gas development asset with potential offshore-sized resources in place.”

Rising revenues, assets and losses

The accounts also reported small rises in Union Jack’s revenue, operating costs and the total loss for the year.

Net assets increased by 35% to more than £18 million. During 2020, the company increased its stake in five onshore licences in Lincolnshire.

Mr Bramhill said:

“I have no doubt even in these unprecedented times, that given our attractive projects, we will achieve our goal of increasing production materially and becoming a significant, principally onshore mid-tier UK producer in due course.

“The Company remains in sound financial health, with a robust balance sheet, continues to be debt free, with ample cash reserves to fund its well testing and planned development commitments, offering shareholders ongoing and significant scope for growth.

“The future of Union Jack remains bright.”

Union Jack licence acquisitions

Keddington PEDL005(R): March 2020 purchase of 35% interest from Terrain Energy for £200,000, increasing holding to 55%.

Wressle PEDLs 180 and 181: June 2020 12.5% interest from Humber Oil & Gas Ltd, increasing holding to 40%, for £500,000 in cash and £1,040,000 deferred cash.

North Kelsey PEDL241: 30% from Egdon Resources for £100,000, taking total holding to 50%

Biscathorpe PEDL253: June 2020 3% from Montrose Industries for £115,000. January 2021 15% interest from Humber Oil & Gas for £1,000,000, increasing holding to 45%.

Louth Prospect PEDL339: March 2020, bought 15% interest from Terrain Energy

Key financial figures

Revenue: £158,004 (2019 £136,959)

Operating costs: £286,892 (2019 £185,169)

Operating loss: £1,883,893 (2019 £1,705,19) – higher administrative costs and impairments to licences, property, plant and equipment

Loss for the financial year: £1,865,515 (2019 £1,692,383)

Total comprehensive loss for the financial year: £1,948,705 (2019 £1,724,595)

Cash balance at 1 May 2021: in excess of £5.7 million (not including £1m+ in loan receipts and royalties due in 2021-2022)

Cash and cash equivalents at year-end: £7,269,014 (2019 £6,626,322)

Total assets at year-end: £21,340,804 (2019 £14,234,850).

Non-current assets at year-end: £13,725,734 (2019 £7,428,331).

Intangible assets: £6,134,717 (2019 £6,726,743).

Tangible assets: £6,452,287 (2019 £581,300).

Net assets: £18m (2019 £13m)