Union Jack Oil plc announces strategic entry into US market with high-potential royalty acquisitions


Union Jack Oil plc (AIM: UJO), a leading UK onshore-focused production, development, and exploration company, has officially announced its strategic expansion into the United States market. This significant move is highlighted by the acquisition of three Mineral Royalty packages in some of the most prolific hydrocarbon regions in the United States. These acquisitions, brokered by the company’s agent and adviser, Reach Oil & Gas Inc (“Reach”), mark Union Jack Oil’s initial foray into the US, setting a new precedent for the company’s growth and diversification strategy.

Investment Highlights and Strategic Acquisitions

The company has successfully purchased Royalties in the Permian Basin, Texas, comprising a total cash consideration of US$854,070 (£677,235). These include the Cronus Unit with 25 wells, the COG Operating LLC operated Powell Ranch Unit with 15 wells, and the Occidental operated Palm Springs Unit with 10 horizontal wells. With an effective date ranging from December 2023 to January 2024, these Royalties promise a lucrative investment opportunity, boasting an economic life of over 26 years and a projected Internal Rate of Return exceeding 20%.

Union Jack Oil plc Expands into the US Market with Strategic Royalty Acquisitions and Joint Ventures

Union Jack Oil plc Expands into the US Market with Strategic Royalty Acquisitions and Joint Ventures

Advantages of the US Royalties

The acquisition offers Union Jack exposure to some of the most active basins and largest operators in the US. Notably, these investments come with monthly income potential, devoid of development or operating costs, and are owned in perpetuity without any forward liabilities. The focus on the Permian Basin, a key oil-producing region, aligns with Union Jack Oil’s strategic goal of tapping into areas with a substantial daily oil output, ensuring long-term production and drilling prospects.

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Future Collaborations and Joint Ventures

Union Jack Oil is also on the brink of finalizing Joint Venture agreements with Reach for several exploration, drilling, and potential production ventures in Oklahoma. These collaborations aim to secure material interests in projects with a high chance of success and significant cash flow potential, complementing Union Jack’s profitable UK-based operations. The company’s technical team has conducted due diligence, including site visits, to ensure the viability and potential of these investments, with drilling programs planned to commence in early Q2 2024.

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Union Jack Oil’s Strategic Vision

This strategic expansion and collaboration with Reach underscore Union Jack Oil’s commitment to growth and diversification. By venturing into the US market, Union Jack aims to enhance its portfolio with high-potential investments, leveraging Reach’s expertise in managing the acquired Royalties and identifying lucrative drilling opportunities. The move not only positions Union Jack Oil as a key player in the international oil and gas industry but also promises substantial returns for its shareholders.

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