LONDON (ShareCast) - (Sharecast News) - Union Jack Oil announced the signing of a farm-in agreement with Reach Oil and Gas on Wednesday, to acquire a 60% working interest in the Sark drilling project in central Oklahoma, as it continued to build momentum in the US onshore oil market.
The AIM-traded company said it would pay 80% of the costs to drill and develop the well, which was expected to spud early in the third quarter of the year.

It said the 3D-supported Sark prospect targeted a 156-acre fault-closed structure with 40 feet of relief and estimated gross recoverable resources of 1.44 million barrels of oil.

The project carried a net drilling and development cost of approximately $1.1m, including $0.24m in back costs.

Union Jack estimated a net present value at a 10% discount of around $10.9m under a $65 per barrel oil price scenario, with a 65% chance of success.

The well would test multiple stacked reservoirs, including primary targets in the Hunton and 2nd Wilcox formations to a total depth of 5,500 feet, with secondary targets in the Prue Sands, Red Fork, and Base Pennsylvanian Sands.

The structure lay adjacent to a historic oilfield that produced around 1.6 million barrels from the same horizons.

"Sark is the next welcome addition to our rapidly growing portfolio of activities in Oklahoma and follows the successful oil discovery at Moccasin where such play types are now designated a high chance of success," said executive chairman David Bramhill.

He added that Union Jack had drilled four consecutive discoveries in Oklahoma over the past 15 months and was now "entering into a period of sustained activity" in the state, building on its existing revenues from the Wressle field in the UK.

"This agreement ... will be another material oil development project for Union Jack," Bramhill said.

At 1243 BST, shares in Union Jack Oil were down 2.94% at 8.74p.

Reporting by Josh White for Sharecast.com.

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