Union Jack Acquires Interest in German Assets Through Beacon

Union Jack Acquires Interest in German Assets Through Beacon
Union Jack Oil has acquired a 3.22 percent interest in Beacon Energy.
Image by Yuri Arcurs peopleimages.com via iStock

United Kingdom-focused Union Jack Oil plc has acquired a 3.22 percent interest in Beacon Energy plc.

Beacon is a full-cycle oil and gas company with a portfolio of production, development, appraisal, and exploration onshore Germany through its wholly owned subsidiary Rhein Petroleum GmbH, Union Jack noted in a news release Wednesday.

After Union Jack’s recent fundraising, the company said it now holds 430 million ordinary shares of no par value in Beacon, representing 3.22 percent of Beacon's issued share capital. The acquisition of shares was confirmed in a filing posted by Beacon on its website.

"In line with our stated strategy to seek growth opportunities in foreign jurisdictions with politically safe regimes, we are very pleased to declare our initial investment in Beacon”, Union Jack Executive Chairman David Bramhill said. “We consider the investment to be a good use of capital generated from consistent cash flows principally from our flagship asset at Wressle”.

"We have met with the management of Beacon and are familiar with their onshore assets in Germany, which we consider hold impressive scope and upside potential for both the near and mid-term”, Bramhill added. “Without doubt, we see a synergy between Beacon's and Union Jack's modus operandi and we look forward to the results of what appears to be a very encouraging and value accretive work program going forward, including the testing of the Schwarzbach-2(2.) well”.

According to the Beacon website, Rhein Petroleum holds a 100 percent interest in the Schwarzbach Production License in the German state of Hessen, covering 2,184 acres (8.8 square kilometers). The field comprises four juxtaposed structural compartments: Kuehkopf, Stockstadt Mitte, Schwarzbach Main, and Schwarzbach South.

Beacon earlier in the month reported positive results for the SCHB-2(2.) well, encountering “an excellent 34-meter gross interval containing 28 meters of oil-bearing net reservoirs in the Pechelbronner-Schichten sandstones within the Stockstadt Mitte segment of the Erfelden field”, according to a recent news release.

“As all these metrics are above or at the top of the range of pre-drill expectations, the likelihood is that this will result in a material upgrade to recoverable reserves in Stockstadt Mitte and a de-risking of 2.4 million barrels of contingent resources already ascribed to Schwarzbach South”, Beacon said in the release, referring to the results of the well testing.

“We believe this well has the potential to deliver at very high rates and establishing these flowrates through clean-up of the wellbore, and eventual installation of an ESP [electrical submersible pump] is now our top priority although we won't be able to provide definitive guidance on production expectations until we have completed the clean-up and artificial lift solutions. At flow rates of 900 bopd [barrels of oil per day], the company would expect to deliver operating cash flows in excess of US$1.5 million per month (assuming $80/bbl Brent)”, Beacon Energy Chief Executive Officer Larry Bottomley said.

At the end of August, Union Jack began the installation of a downhole jet pump and associated surface facilities as part of the planning to optimize future production at its flagship Wressle-1 well, according to a Union Jack news release. The company holds a 40 percent economic interest in the Wressle development. Production from Wressle-1 is expected to be reinstated in late September, Union Jack said.

"Industry sources indicate that over 90 percent of oil wells employ artificial lift during their life-cycle, therefore, the natural sequence of the installation of a jet pump on the Wressle-1 well offers a reliable method of ensuring the continued operation and the optimization of its future production performance”, Bramhill noted.

Earlier in August, Union Jack announced net revenues of over $17 million had been achieved from the Wressle development, located within licenses PEDL180 and PEDL182 in North Lincolnshire on the western margin of the Humber Basin. Production at Wressle was restarted in August 2021, according to a separate news release.

"Over the past two years, Wressle-1 production has transformed Union Jack`s financial position, allowing the company to post a maiden profit and make significant distributions to shareholders. We continue to believe that when this important conventional onshore hydrocarbon producing asset is fully appraised and developed it will assist to fund the growth of Union Jack for many years to come”, Bramhill said.

To contact the author, email rocky.teodoro@rigzone.com

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