Union Jack Oil add a new Oklahoma opportunity with latest Reach tie-up

Union Jack Oil (UJO) has acquired a 60% working interest in the Sark well in central Oklahoma from partner Reach Oil and Gas, committing an 80% share of the estimated $1.1 million net well costs. The project, slated for early Q3 drilling, targets 1.44 million barrels of recoverable resources with a 65% chance of success and a potential net present value of $10.9 million. This move represents a material expansion of UJO's US portfolio, building on recent successes in Oklahoma and complementing its established UK operations.

Analysis

Union Jack Oil (UJO) is strategically expanding its US operations through a capital-efficient transaction, acquiring a 60% working interest in the Sark well, Oklahoma, by funding 80% of the estimated $1.1 million total well cost. This deal presents a compelling risk/reward profile, targeting 1.44 million barrels of recoverable resources with a potential net present value of $10.9 million upon success. The high stated chance of success at 65% is notably supported by the company's recent operational momentum, which includes four consecutive discoveries over the past 15 months in partnership with Reach Oil and Gas. Management's commentary frames this as a deliberate step in building a second, material business in the US to complement its profitable revenue-generating Wressle asset in the UK, signaling a clear strategy of geographic diversification and growth funded by existing cash flow.

Key Decisions for Investors

• Investors should evaluate the attractive risk/reward profile, where UJO is deploying approximately $880,000 in capital for a potential $10.9 million NPV project with a stated 65% geological chance of success.
• The primary near-term catalyst is the Sark well drilling result, expected in early Q3, which, if successful, would validate the US expansion strategy and likely de-risk the company's growing Oklahoma portfolio.
• Consider this deal as a continuation of a proven operational strategy in the US, but remain cognizant of the binary risk inherent in single-well exploration, even with a strong recent track record.