Union Jack Oil signs 60% farm-in deal for Sark well in Oklahoma with $10.9m success case potential
Union Jack Oil enters 60% farm-in deal for Sark well in Oklahoma, eyeing $10.9M NPV. Find out what makes this high-impact project a key U.S. oil play.
Union Jack Oil plc (AIM: UJO, OTCQB: UJOGF), the UK- and USA-focused onshore oil producer, has announced a farm-in agreement with Oklahoma-based Reach Oil and Gas Inc to acquire a 60% working interest in the planned Sark drilling project. Under the terms of the agreement, Union Jack Oil will pay 80% of the costs to drill, complete, and develop the well, including back costs of US$236,800, for a total estimated outlay of approximately US$1.1 million net.
Slated to spud in early Q3 2025, the Sark well represents a high-impact addition to Union Jack Oil’s U.S. portfolio. With gross estimated recoverable resources of 1.44 million barrels of oil and a potential net present value (NPV10%) of US$10.9 million assuming a US$65 per barrel oil price, the project strengthens the company’s strategic pivot toward American hydrocarbon assets.
What geological factors and regional oil data are supporting Union Jack Oil’s investment in the Sark drilling project?
The Sark project targets a dip and fault-closed structure encompassing 156 acres with 40 feet of vertical relief, supported by 3D seismic data. The well will be drilled to a total depth of 5,500 feet, testing the Hunton and 2nd Wilcox formations—zones historically productive in this part of Central Oklahoma. Secondary objectives include the Prue Sands, Red Fork, and Base Pennsylvanian Sands.
The structure lies adjacent to an oilfield that previously produced approximately 1.6 million barrels of oil from the Hunton and 2nd Wilcox sands. Union Jack Oil noted the presence of a counter-regional fault, down to the east in a Graben formed by the Wilzetta Fault, with closure evident down to the Arbuckle level. Management highlighted further upside of an additional 1.5 million barrels gross as part of the prospect’s extended structural play.
In geological terms, the Sark target is considered robust, with Union Jack Oil estimating a 65% chance of success based on nearby well data, seismic interpretation, and multiple stacked targets.
How does the Sark well fit into Union Jack Oil’s broader U.S. strategy following its Moccasin success?
The Sark farm-in represents the latest move in a deliberate U.S. expansion strategy that has gained momentum since early 2024. Union Jack Oil’s Executive Chairman David Bramhill emphasized that the Sark project is a “welcome addition” following the recent success at the Moccasin well, also drilled with Reach Oil and Gas Inc. The Moccasin well, which resulted in a commercial discovery, helped de-risk analogous play types across the region and shifted institutional perception of Union Jack Oil’s U.S. capabilities.
Over the past 15 months, the AIM-listed energy developer has drilled four consecutive discoveries in Oklahoma, building a foundation for what Bramhill described as a “second valuable commercial business in the USA.” This shift complements its profitable UK asset at Wressle, allowing the group to balance revenue generation with high-upside exploration.
Institutional investors have noted the capital-efficient structure of Union Jack Oil’s U.S. projects, where relatively low drilling costs—averaging around US$1 million per well—are paired with meaningful resource upside and swift development timelines.
What financial metrics and risk-return profiles are attached to the Sark drilling investment?
Union Jack Oil’s estimated investment of US$1.1 million includes development and completion costs along with reimbursed back costs. The success case NPV10% of US$10.9 million implies a tenfold return on capital in the event of a commercial discovery. The economic case is modeled on a conservative US$65 per barrel oil price, which analysts view as a prudent base scenario given current WTI prices hovering around US$74–78 per barrel.
Importantly, Union Jack Oil’s deal structure allows for a 60% working interest while paying 80% of costs, a typical farm-in arrangement designed to attract operator alignment while retaining leverage on discovery economics. The company has not yet disclosed whether it intends to serve as operator or defer to Reach Oil and Gas Inc post-drill, although prior projects have followed a non-operated model.
Institutional sentiment remains moderately bullish on Union Jack Oil’s Oklahoma expansion, with analysts citing its track record of drilling success and disciplined cost management. However, broader concerns around U.S. onshore regulatory uncertainty and fluctuating service costs remain active considerations for investors.
What are the broader implications of Union Jack Oil’s Oklahoma shift for shareholders and future project development?
Union Jack Oil’s U.S. expansion strategy—anchored in high-impact but lower-cost wells like Moccasin and Sark—suggests a structural rebalancing of its asset portfolio toward faster-turnaround, scalable oil projects. While its UK asset at Wressle has provided consistent revenue streams, the Oklahoma assets offer higher growth potential and the opportunity to establish a new commercial foothold in one of the most infrastructure-ready oil-producing states in the U.S.
For shareholders, the Sark deal reinforces the narrative that Union Jack Oil is moving decisively to build a second operating hub that can complement and eventually diversify away from UK onshore dependency. If successful, the Sark well could also unlock future adjacent prospects across the same fault-block complex, offering operational synergies for future drilling campaigns.
From a capital markets perspective, the timing of this announcement in early Q3 2025 aligns with a broader upswing in junior energy investor interest in U.S. basins, particularly among small-cap explorers with repeatable playbooks. Analysts expect Union Jack Oil to continue deploying modest amounts of capital into similar projects with asymmetric upside and manageable downside exposure.
What are the near-term milestones and investor expectations for the Sark project over the next two quarters?
The Sark well is expected to spud in early Q3 2025, and drilling operations are likely to be completed within weeks, given the total depth target of 5,500 feet. If initial results confirm hydrocarbon presence in either the Hunton or 2nd Wilcox zones, Union Jack Oil may move swiftly to complete and test the well. Given the play’s structural characteristics and adjacent production history, a discovery would likely fast-track monetization via nearby infrastructure.
Investors will be closely monitoring updates on rig mobilization, spud timing, and drill results. Additionally, institutional watchers are likely to assess how the company manages potential success-case follow-on opportunities within the same fault structure. With a 65% estimated chance of success, the Sark project carries more certainty than typical exploration wells and offers material near-term value inflection potential for the AIM-listed hydrocarbon developer.
Looking ahead, Union Jack Oil is expected to remain active in Oklahoma with further deals, exploration, or appraisals likely to be announced before year-end. Institutional investors view this as a sign of increasing operational momentum, with capital discipline and technical confidence playing in the company’s favor.
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