Union Jack Oil Expands US Footprint with Sark Drilling Project
Why we think this is good
The farm-in agreement for the Sark well in Oklahoma represents a significant opportunity for Union Jack Oil to expand its operations in the USA. The project has the potential for substantial revenue, with estimated recoverable resources of 1.44 million barrels of oil and an estimated NPV10% of US$10.9 million net. The funding is being provided, reducing the risk, and the execution risk appears relatively low based on the technical details provided. While some financial details are unquantified and the timeline is not fully clear, the overall assessment is that this is a positive development for the company.
Key Points
- Union Jack Oil has signed a farm-in agreement to acquire a 60% working interest in the Sark well project in Oklahoma, USA
- The Sark well is estimated to have recoverable resources of 1,440,000 barrels of oil gross
- The estimated success case NPV10% is circa US$10,900,000 net, based on a US$65/bbl oil price
- The well will target the Hunton and 2nd Wilcox formations, with a 65% chance of success
- The project is adjacent to an existing oilfield that has produced around 1.6 million barrels of oil from similar formations
- The funding for the project is being provided, reducing the risk
Summary
Union Jack Oil has signed a farm-in agreement with Reach Oil and Gas Inc to acquire a 60% working interest (paying 80%) in the Sark well, planned to be drilled in early Q3 2025, located in Central Oklahoma, USA. The Sark well is estimated to have recoverable resources of 1,440,000 barrels of oil gross, with an estimated success case NPV10% of circa US$10,900,000 net, based on a US$65/bbl oil price. The well will target the Hunton and 2nd Wilcox formations, with a chance of success of finding movable hydrocarbons estimated at 65%. The project is adjacent to an existing oilfield that has produced around 1.6 million barrels of oil from similar formations. The funding for the project is being provided, reducing the risk, and the technical details suggest the execution risk may be relatively low.