PRODUCTION, DRILLING,
DEVELOPMENT AND
INVESTMENT IN THE
UNITED KINGDOM ONSHORE
HYDROCARBON SECTOR
UNION JACK OIL plc
Annual Report and
Financial Statements
2017
UNION JACK OIL PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
Directors, Officers and Advisers
DIRECTORS
David Bramhill
Executive Chairman
Joseph O’Farrell
Executive
Graham Bull
Non-Executive
Raymond Godson
Non-Executive
COMPANY OFFICE
6 Charlotte Street,
Bath BA1 2NE,
England
Telephone: +44 (0) 1225 428139
+44 (0) 1225 428140
Fax:
Email: info@unionjackoil.com
Web: www.unionjackoil.com
REGISTERED NUMBER
07497220
SECRETARY AND
REGISTERED OFFICE
Matthew Small
6 Charlotte Street,
Bath BA1 2NE,
England
BANKERS
Royal Bank of Scotland plc
8-9 Quiet Street,
Bath BA1 2JN,
England
REGISTRARS
Computershare Investor Services PLC
The Pavilions,
Bridgwater Road,
Bristol BS13 8AE,
England
NOMINATED ADVISER
SP Angel Corporate Finance LLP
Prince Frederick House,
35-39 Maddox Street,
London W1S 2PP,
England
AUDITOR
BDO LLP
55 Baker Street,
London W1U 7EU,
England
SOLICITORS
Osborne Clarke
2 Temple Back East,
Temple Quay,
Bristol BS1 6EG,
England
JOINT BROKERS
SP Angel Corporate Finance LLP
Prince Frederick House,
35-39 Maddox Street,
London W1S 2PP,
England
Turner Pope Investments (TPI) Limited
6th Floor,
Becket House,
36 Old Jewry,
London EC2R 8DD,
England
Contents
BUSINESS AND STRATEGY
2
6
8
Chairman’s Statement
Strategic Report
Review of Operations
GOVERNANCE
Directors’ Report
Corporate Governance Report
Directors’ Responsibilities
Statement
Independent Auditor’s Report
on the Financial Statements
FINANCIAL STATEMENTS
Income Statement
Statement of
Comprehensive Income
Balance Sheet
Statement of Changes in Equity
Statement of Cash Flows
Principal Accounting Policies
Notes to the Financial Statements
20
22
23
24
29
30
31
32
33
34
38
ANNUAL GENERAL MEETING
51
Notice of Annual General Meeting
1
Union Jack Oil plc is an onshore oil and gas exploration and
production company with a focus on drilling, development,
investment and production in the United Kingdom
hydrocarbon sector. The issued share capital is traded on the
AIM Market of the London Stock Exchange (Ticker: UJO).
Our strategy is the appraisal and exploitation of the assets
currently owned. Simultaneous with this process, the
Company’s management expects to continue to use its
expertise to acquire further licence interests over areas
where there is a short lead time between the acquisition
of the interest and either exploration drilling or initial
production from any oil or gas fields that may be discovered.
www.unionjackoil.comUNION JACK OIL PLC
Chairman’s Statement
I am pleased to present to the shareholders of Union Jack Oil plc
(“Union Jack” or the “Company”), the Annual Report and Financial
Statements for the year ended 31 December 2017.
The objective of the Board remains to build a sustainable
and successful conventional onshore hydrocarbon
production and development business. In this respect,
we have had another successful year in expanding
our high-quality portfolio of licence interests.
Considerable progress was made in the year under
review and in the post balance sheet events period up to
the signing of these financial statements that represents
a period of solid progress with the highlights being:
• expanding our portfolio with accretive asset
value selective transactions with further
interests in Wressle and Biscathorpe;
•
increased our proven reserves, and level of resources;
• continue to build our oil production profile by
the addition of an interest in the producing
Fiskerton Airfield oilfield and the acquisition of
a further interest in the Keddington oilfield; and
• prepared for the drilling of two significant conventional
prospects.
We have expanded our asset base by the acquisition of:
• a further 3.33% interest in PEDLs 180 and 182
containing the significant Wressle discovery bringing
our interest to 15%;
• a 20% interest in the producing Fiskerton Airfield
oilfield which in the opinion of the Board holds scope
for a significant upgrade in production going forward;
• a further 10% interest in PEDL253 containing the
attractive conventional drill-ready Biscathorpe-2
prospect that is expected to be drilled around mid-
year 2018 as a result of a farm-in and as a post balance
sheet event, increasing our interest to 22%; and
• a further 10% interest in the producing Keddington
oilfield contained within Cairn Energy’s onshore
portfolio purchased during 2017 bringing our interest
to 20%.
PEDL180 / PEDL182 WRESSLE DISCOVERY (15%)
BROUGHTON NORTH PROSPECT (15%)
Located in Lincolnshire, on the western margin of the
Humber Basin, PEDL180 and PEDL182 contain the
substantial conventional Wressle oil discovery with
proven reserves and significant upside from which first
commercial oil is expected to flow at a constrained
rate of 500 barrels of oil per day gross. Union Jack
holds a 15% interest in both licences including the
Wressle-1 oil discovery awaiting development.
During testing, the Wressle-1 discovery well flowed an
aggregate of 710 barrels of oil equivalent per day from
the three zones tested. Subsequent to testing and the
decision by the joint venture to declare commerciality
status on the project, an independent Competent Persons
Report was prepared by ERC Equipoise ("ERCE") that
provided Reserves, Contingent and Prospective Resources
associated with the Wressle-1 discovery and Broughton
North Prospect. The findings of ERCE are highlighted within
the Review of Operations section of this Annual Report.
In January 2018 the Planning Inspectorate denied appeals
in respect of the development of the Wressle discovery.
Following this decision the operator announced its
intention to submit two new applications to the North
Lincolnshire Council, one to extend the existing
planning consent for a further year and the second for
the field development of the Wressle discovery. The
first application was submitted during April 2018.
In respect of the second application, since January 2018
the operator has drilled two deeper cored groundwater
boreholes in addition to the investigation boreholes
previously drilled. The data from these operations are
being used to support this application which will contain a
revised site design and hydrological risk assessment. Once
the operator has received and integrated the results of the
hydraulic conductivity tests executed on the core samples,
the second application will be submitted to the North
Lincolnshire Council in May 2018. This new application will
address the stated points raised by the Planning Inspector.
The joint venture partners remain confident that the
Wressle development will be brought to production
status and will continue to pursue all credible avenues
to achieve this objective. An Environment Agency
permit for production is already in place in respect
of the development.
2
ANNUAL REPORT AND FINANCIAL STATEMENTS 2017UNION JACK OIL PLC OPERATIONAL HIGHLIGHTS
FINANCIAL HIGHLIGHTS
• Expanding our portfolio with accretive asset
value selective transactions with further
interests in Wressle and Biscathorpe;
• Increased our proven reserves, and level of
resources;
• Continue to build our oil production profile
by the addition of an interest in the producing
Fiskerton Airfield oilfield and the acquisition
of a further interest in the Keddington
oilfield; and
• Prepared for the drilling of two significant
conventional prospects.
PEDL253 – BISCATHORPE (22%)
PEDL253 is within the proven hydrocarbon fairway of the
South Humber Basin and is on trend with the Saltfleetby
gasfield, Keddington oilfield, the Louth and North Somercotes
prospects and contains the Biscathorpe Prospect.
The current Best Estimate is a gross Prospective Resource
of 14 million barrels of oil with a geological Chance of
Success of 40%.
The Biscathorpe Prospect is a well-defined, four-way
dip closed structure mapped from recently re-processed
3D seismic. The Biscathorpe-1 well drilled by BP in 1987
encountered a thin oil filled sandstone which is expected
to thicken down-dip.
The Biscathorpe-2 conventional well will be located in a
direction towards a potentially thicker sand development
within the structural closure of the trap.
Partner approval has been granted to drill Biscathorpe-2
around mid-year 2018.
During 2017, Union Jack commissioned an independent
review of the Biscathorpe 3D conducted by geophysical
consultants Sotwell Exploration Ltd (“Sotwell”). The
findings were encouraging and confirmed the Biscathorpe
“concept” with good evidence from seismic attributes for
the sand thickening away from the current well location
which in the opinion of Sotwell, the Biscathorpe-2 location
to appraise the prospect appears optimal. In addition,
Sotwell’s belief is that the whole area is very attractive
for hydrocarbon exploration and that a “mega” play trap
is potentially feasible with significant stratigraphic upside
potential. According to the operator, if the stratigraphic
closure is proven the, gross Prospective Resources
could increase to circa 35 million barrels of oil (P10).
The proposed Biscathorpe-2 well will involve conventional
drilling for oil trapped in a sandstone reservoir and for clarity
the operations at the site will neither now, nor in the future
involve the process for hydraulic “fracking” for shale gas or
shale oil.
• Cash balance in excess of
£2.0 million as at 30 April 2018;
• £1.25 million before expenses
raised in March 2018 to
expand further the Company’s
asset portfolio; and
• The Company remains debt free.
PEDL143 – HOLMWOOD (7.5%)
Holmwood is a conventional oil prospect located in the
Weald Basin and was first identified by BP in 1988 and
is estimated to hold gross mean un-risked Prospective
Resources of 5.6 million barrels of oil with a geological
chance of success of 50%. Further upside resource potential
exists from the Jurassic Kimmeridge limestones and there is
believed to be the presence of multiple potential pay zones.
The proposed drill site for the Holmwood-1 exploration well
is approximately 12 kilometres immediately west of, and of
similar stratigraphy to the important Horse Hill discovery.
Holmwood-1 is a conventional exploration well and
is currently expected to be drilled in late 2018.
EXL294 FISKERTON AIRFIELD OILFIELD (20%)
Union Jack purchased a 20% economic interest
including surface infrastructure and facilities in this
producing oilfield in November 2017. The oilfield has
had workovers on wells FA-1 and FA-3 with a view
to enhancing cash flows by increasing production via
low-cost well interventions, installation of new tubing,
pumps and the isolation of water producing zones.
The workovers of FA-1 and FA-3 were successfully
completed in the period January to March 2018.
Production operations have resumed at Fiskerton and
initial field production, prior to further optimisation and
further operations during the coming period, including
the increasing of the pumping rate, is approaching 30
bopd of good quality (35.2° API gravity) oil, a significant
increase on the pre-workover rate of 16 bopd.
Oil production since resumption of operations to date
exceeds 1,250 barrels gross and product is being sold and
transported by road tanker to a refinery at Immingham,
North East Lincolnshire.
3
BUSINESS AND STRATEGYwww.unionjackoil.comUNION JACK OIL PLC Chairman’s Statement
The Company believes there is upside potential in the
oil resources at Fiskerton Airfield. Union Jack is funding
a 3D seismic re-processing exercise on behalf of the
joint venture partners to assist in re-mapping a 24 square
kilometre area surrounding Fiskerton Airfield to identify
further production opportunities from the reservoir.
It is expected that initial interpretations from the 3D
seismic processing will be available during H1 2018.
Subject to the results of the 3D seismic re-processing,
the joint venture partners will investigate the potential
to further increase production through in-fill drilling.
PEDL203 KIRKLINGTON OILFIELD (16.67%)
PEDL118 DUKES WOOD OILFIELD (16.67%)
Union Jack acquired these licence interests in October
2017, through the purchase of Cairn Energy plc’s entire
onshore UK portfolio. These licence interests contain
previously producing oilfields that are currently shut-in.
PEDL203 contains the Kirklington oilfield that was
originally discovered by BP in 1985 and produced
oil from two Carboniferous reservoirs.
The Kirklington-3 and 3-Z sidetrack wells were drilled in
2010 and produced oil from only one of nine potential
pay zones until mid 2013. The Kirklington 3-Z well is
currently shut-in and production facilities have been
preserved on a care and maintenance basis. Should
a future production decision be taken, the existing
production facilities can be made production ready once
remedial work has been conducted to site equipment.
PEDL118 contains the Dukes Wood oilfield originally
discovered by a predecessor company to BP in
1939. The oilfield was decommissioned in 1966
having produced approximately 6.5 million barrels
of oil from a mapped 25.6 million barrels of oil in
place representing a recovery factor of 24.5%.
The Dukes Wood-1 well was drilled in 2010 and
encountered three hydrocarbon bearing reservoir zones, the
Ashover Grit, Crawshaw sandstone and Loxley Edge Rock,
all of which were flow tested.
Various studies are currently ongoing at both Kirklington
and Dukes Wood to identify reservoir zones containing
previously unproduced or undrained resources. These
studies will evaluate completion and enhanced recovery
operations, both mechanical and chemical, which could be
applied to the unswept oil reservoirs that are present that
could justify re-establishing production from either oilfield.
PEDL005(R) KEDDINGTON OILFIELD (20%)
Keddington is currently producing approximately 22
barrels of oil per day (gross) from Carboniferous age
sandstone reservoirs from the Keddington 3-Z well.
Recent mapping of the 3D seismic over the producing
Keddington oilfield has indicated areas of potentially
unswept oil within structural closure. Comprehensive
geophysical and geological evaluation is ongoing
to better define the greater Keddington area.
PEDL005(R) contains the Louth Prospect which also extends
into PEDL339 (20%). Louth is defined on reprocessed 3D
seismic data and is estimated to contain STOIIP of 5.5 million
barrels of oil and gross mean Prospective Resources of
1.2 million barrels of oil with an attractive chance of success
of 37%.
In addition, the entire North Somercotes gas prospect is
within PEDL005(R) which is estimated to contain gross mean
Prospective Resources of 11 billion cubic feet of gas with a
chance of success of 25%.
OTHER ASSETS
Other assets held by Union Jack include interests in,
North Kelsey PEDL241 (20%), Burton on the Wolds
PEDL201 (10%), PEDL339 (10%) which contains an
extension of the Louth Prospect and PEDL209 (10%).
A detailed review of Union Jack’s asset base can be found in
the Review of Operations section within this Annual Report.
CORPORATE AND FINANCIAL
Union Jack remains debt free and our cash balance
as at 30 April 2018 stands in excess of £2 million,
with sufficient funds to cover the cost of drilling our
expanded interest in Biscathorpe-2, Holmwood-1 and
surplus working capital for at least a 12 month period
from the date of approving the financial statements.
During March 2017, the Company acquired a further
3.33% in PEDL180 and PEDL182 containing the
Wressle oil discovery from Celtique Energie Petroleum
Limited for a consideration of £600,000. As a result,
the Company holds a 15% interest in these licences.
During October 2017, the Company acquired the entire
on-shore portfolio of Nautical Petroleum, a subsidiary
of Cairn Energy plc.
During March 2018, and as described in the Events After
the Balance Sheet Date note, the Company raised £1.25
million before expenses in an oversubscribed placing. A
portion of the funds raised have allowed Union Jack to
increase its interest by a further 10% in PEDL253 containing
the Biscathorpe-2 Prospect which is expected to be
drilled around mid-year 2018. Following this transaction
the Company now holds a 22% interest in PEDL253.
In addition, after the Balance Sheet Date, the Company
entered into a Commercial Partnership with UK based
Humber Oil & Gas Limited ("Humber").
The first collaboration was a farm-in involving Humber
and Union Jack in March 2018 for a combined 20% interest
in PEDL253, with each of the companies acquiring a
10% interest.
4
ANNUAL REPORT AND FINANCIAL STATEMENTS 2017UNION JACK OIL PLC We look forward to the drilling of Biscathorpe-2 in mid
2018 and Holmwood-1 currently scheduled for late
2018. Expectations are high in respect of both these
excellent prospects. A modicum of success on either
would have a significant positive effect on the Company.
Again, I am confident of a resolution to obtaining a positive
development decision at Wressle which, if and when
positively determined (as we believe it will), would result in
a material transformation to the cash flows of Union Jack.
Our asset portfolio is well balanced with the relevant
components of production, development, appraisal
and discovery that are all in place as is adequate
funding for our commitments going forward.
The future of Union Jack remains bright.
David Bramhill
Executive Chairman
1 May 2018
We are currently working with Humber on other
investment opportunities and look forward to
announcing further attractive projects as and when
they come to fruition.
G.P (Jersey) Limited, an entity with connections to the
management of Humber, owns 10% of the issued share
capital of Union Jack.
I would customarily like to take this opportunity to thank
my co-directors, Joe O’Farrell, Graham Bull and Ray
Godson for their continued support and professional
advice throughout the year. This same comment also
applies to our advisers, all of whom assist in the efficient
running of Union Jack, and of course to our shareholders.
I welcome Matt Small as Company Secretary following
the sad passing of Brian Marshall who served Union Jack
loyally from its incorporation as Company Secretary and
Financial Controller.
SUMMARY
I remain very optimistic in respect of Union Jack’s
future prospects as we have:
• assembled an attractive portfolio with proven reserves,
contingent resources and drill-ready prospects;
•
interests in two producing oilfields;
• a 15% interest in the significant Wressle oil discovery;
•
two significant potentially high-impact exploration wells
planned to be drilled in 2018;
• continued to remain debt free; and
•
in excess of £2 million in cash balances.
5
BUSINESS AND STRATEGYwww.unionjackoil.comUNION JACK OIL PLC Strategic Report
FOR THE YEAR ENDED 31 DECEMBER 2017
STRATEGY
Our strategy is the appraisal and exploitation of the
assets currently owned. Simultaneous with this process,
the Company’s management expects to continue to use
its expertise and cash resource to acquire further licence
interests in the UK over areas where there is a short lead time
between the acquisition of the interest and either exploration
drilling or initial production from any oil or gas fields that may
be discovered.
BUSINESS REVIEW
Union Jack Oil plc is a UK registered company, focused on
the exploration for, and future development of, hydrocarbon
projects.
A review of the Company’s operations during the year ended
31 December 2017 and subsequently to the date of this
report is contained in the Chairman’s Statement and Review
of Operations.
The loss for the year amounted to £746,822 (2016: £891,709).
The directors do not recommend the payment of a dividend
(2016: nil).
In February 2017, 1,032,589,694 new ordinary shares were
issued for cash at 0.135 pence per share raising £1,393,997
before expenses of £140,342.
The enlarged issued share capital following the issue of new
shares described in this section is 4,333,063,205 ordinary
shares of 0.025 pence each and 831,680,400 deferred shares
of 0.225p each.
FUTURE DEVELOPMENTS
The directors intend to continue their involvement with
the licences as disclosed in the Review of Operations. They
continue to seek further acquisition opportunities for onshore
oil and gas exploration and development.
KEY PERFORMANCE INDICATORS
The Company has made good progress during the year ended
31 December 2017. Traditional KPIs are not appropriate
to the Company. Performance is measured by monitoring
exploration costs and ensuring sufficient funds are available
to meet exploration commitments.
The directors were successful in raising funds to ensure the
Company is adequately funded to meet all of its current
commitments in respect of licence terms and drilling
commitments to the end of June 2019.
During March 2017, the Company acquired a further
3.33% in PEDL180 and PEDL182 containing the Wressle
oil discovery from Celtique Energie Petroleum Limited
for a consideration of £600,000. As a result, the
Company holds a 15% interest in these licences.
During October 2017, the Company acquired the entire
on-shore portfolio of Nautical Petroleum, a subsidiary
of Cairn Energy plc, for a consideration of £25,000.
During March 2018, and as described in the Events After
the Balance Sheet Date note, the Company raised £1.25
million before expenses in an oversubscribed placing.
6
A portion of the funds raised have allowed Union Jack to
increase its interest by a further 10% in PEDL253 containing
the Biscathorpe-2 Prospect which is expected to be
drilled around mid-year 2018. Following this transaction
the Company now holds a 22% interest in PEDL253.
Intangible Assets totalled £2,806,278 (2016: £2,079,340).
Tangible assets totalled £496,859 (2016: nil).
The Company’s Income Statement reports revenues of
£46,203 (2016: £22,119) in respect of production income
from the Keddington oilfield.
PRINCIPAL RISKS AND UNCERTAINTIES
As with the majority of companies within the energy sector
the business of oil and gas exploration and development
includes varying degrees of risk. These risks broadly include
operating reliance on third parties, the ability to monetise
discoveries and the risk of cost overruns. There are also
specific, political, regulatory and licensing risks attached
to various projects as well as issues of commerciality,
environmental, economic, competition, reliance on key
personnel, contractor and judicial factors.
Commodity prices will have an impact on potential revenues
and forward investment decisions by the operator on the
projects invested in, as the economics may adversely be
affected. However, onshore development costs are lower
than for offshore developments. The Company does not
use hedging facilities. The Company holds adequate
Directors’ Insurance cover and the Company is covered by
the operator’s insurance during drilling and other operational
situations. The Board, in its opinion, has mitigated risks as far
as reasonably practicable.
The principal risks to the Company as well as the mitigation
actions are set out below:
Strategic: A weak or poorly executed development
process fails to create shareholder value
This can be effected by poor selection of exploration projects
where hydrocarbons are not located.
This risk is mitigated through performing a detailed technical
review, both internally by management and externally by
advisers before an investment decision is taken, for each
investment which includes a valuation exercise on the potential
return on monies spent. All but one of the Company’s current
project investments are at a stage where drilling and potential
development can be executed within a relatively short lead
time. The amount of interest acquired in each project is
dependent upon the Company’s financial capability to fulfil
its obligation. The Company’s technical management team
is highly skilled with many years’ industry experience.
No commercially viable hydrocarbons were identified at
Burton on the Wolds-1 drilled in October 2014. However,
source rock analysis completed in 2015 indicates the presence
of unconventional potential in the licence area. The potential
revenues identified from this analysis would exceed costs and
accordingly, the directors continue to actively evaluate the
licence with a view to possible future explorative drilling.
ANNUAL REPORT AND FINANCIAL STATEMENTS 2017UNION JACK OIL PLC Operational: Operational events can have an
adverse effect
The main risk is the potential failure to obtain planning
permission in respect of the Company’s licence interests.
LIQUIDITY RISK
In order to maintain liquidity to ensure that sufficient
funds are available for ongoing operations and future
developments, the Company uses its existing cash funds.
This risk is mitigated by the appointment of specialist
professional entities who work together to compile planning
applications designed to achieve a positive result.
A further potential risk is the reliance upon the operators
Egdon Resources plc and Europa Oil & Gas Limited and
their ability to determine timetables and priorities which are
beyond the control of Union Jack.
External Risk: Lack of growth caused by political,
industry or market factors
The Company operates exclusively within the United
Kingdom (“UK”) and the Board considers that the
UK onshore hydrocarbon arena offers excellent value
under a regime with a very clearly spelt out protocol
giving the opportunity to develop assets unhindered.
As mentioned in this review, oil and gas price volatility
can cause concern. However, onshore developments can
continue as planned in most cases as development costs
are lower than for offshore. Lack of control over key assets
is mitigated by the fact that our operators of choice,
Egdon Resources plc and Europa Oil & Gas Limited have
a very transparent operating protocol and all partners are
involved, both formally and informally, with offering input
to the ongoing development of the projects in which they
are involved. The Company’s in-house technical team
is involved at all times and regular technical meetings
are held in which opportunity is given to comment.
Financial Risk: The lack of ability to meet financial
obligations
The main risk is the lack of funds being available to pay
for our future drilling commitments.
All drilling expenditure associated with exploration assets
is forecast and budgeted at least 12 months in advance.
The Company raises its funds through the financial
market by share issues and does not become involved in
derivatives and borrowing to fund its financial obligations.
Further comment in respect of Financial Risk Management
Objectives and Policies, Cash Flow Risk, Credit Risk, and
Liquidity Risk are also covered within this Strategic Report.
FINANCIAL RISK MANAGEMENT OBJECTIVES
AND POLICIES
The Company’s activities expose it to a number of financial
risks including liquidity risk, oil price risk, credit risk, and cash
flow risk.
The use of financial derivatives is governed by the Company’s
policies approved by the Board of Directors, which provide
written principles on the use of financial derivatives to
manage these risks. The Company does not use derivative
financial instruments for speculative purposes.
OIL PRICE RISK
The Company is exposed to oil price risk associated with sales
of oil from production. The Company does not currently
consider it necessary to use hedging instruments to manage
its exposure to this risk.
CREDIT RISK
The Company’s principal financial assets are bank balances
and cash. The credit risk on liquid funds is limited because
the counterparty is a bank with high credit-rating.
CASH FLOW RISK
During the year the Company’s activities did not expose it to
financial risks of changes in foreign currency exchange rates.
GOING CONCERN
The Company’s business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Chairman’s Statement, Review of Operations
and the Strategic Report. The directors’ forecasts demonstrate
that the Company will meet its day-to-day working capital and
share of estimated drilling costs over the forecast period (being
at least 12 months from the date the financial statements were
approved) from the cash held on deposit on 31 December
2017 and funds raised subsequent to the year end. The principal
risk to the Company’s working capital position is drilling cost
overruns. The Company has sufficient funding to meet planned
drilling expenditures and a level of contingency. Taking account
of these risks, sensitised forecasts show that the Company
should be able to operate within the level of funds currently
held at the date of approval of these financial statements. The
directors have a reasonable expectation that the Company has
adequate resources to continue in operational existence for
the foreseeable future. Thus they continue to adopt the going
concern basis of accounting in preparing the financial statements.
APPROVAL OF THE BOARD
This Strategic Report contains certain forward- looking
statements that are subject to the usual risk factors and
uncertainties associated with the oil and gas exploration
and production business. While the directors believe the
expectation reflected within the Annual Report to be
reasonable in light of the information available up to the
time of their approval of this report, the actual outcome
may be materially different owing to factors either beyond
the Company’s control or otherwise within the Company’s
control, for example owing to a change of plan or strategy.
Accordingly, no reliance may be placed on the forward-looking
statements.
On behalf of the Board
David Bramhill
Executive Chairman
1 May 2018
7
BUSINESS AND STRATEGYwww.unionjackoil.comUNION JACK OIL PLC PEDL146
NORTH SEA
PEDL183
PEDL181
6
PEDL241
PEDL179
8
8
2
L
X
E
PEDL 174
PL162
PL162
PEDL 178
DL 178
D
PEDL182
P
PPP
PEDL173
PEDL180
EXL288
1
6
1
L
D
E
P
TRUMFLEET
PL161
HATFIELD
9
6
1
L
D
E
P
HATFIELD
PL162
9
PEDL146
PEDL043
PEDL043
PEDL140
PEDL209
DL209
L209
ML004
BECKINGHAM
ML004
CORRINGHAM
ML004
PEDL012
PEDL200
EAST
GLENTWORTH
PEDL253
PEDL
210
PEDL006
PEDL
210
WEST FIRSBY
PEDL183
PEDL006
COLD HANWORTH
5
PEDL005
PEDDD
EDDD
NORTH SEA
PEDL005
PEDL0DL0
00
PEDL005
SALTFLEETBY
Review of Operations
C.E.
EXL288
1
6
1
L
D
E
P
SOUTH LEVERTON
ML007
SCAMPTON NORTH
SCAMPTON
PEDL007
BOTHAMSALL
PEDL179
PEDL210
PL179
NEWTON-ON-TRENT
NETTLEHAM
FARLEYS WOOD
ML003
PEDL130
8
8
2
L
X
E
PEDL 174
PEDL090
EGMANTON
WHISBY
PL162
PL162
TRUMFLEET
PEDL
118
PL161
HATFIELD
PEDL
203
9
6
PEDL202
1
L
D
E
P
AK
AKRING
EAKRING
K 7
KIRKLINGTON
KIRKLINGTON
PEDL 178
D
DL 178
PPP
PEDL182
P
PEDL173
PEDL180
HATFIELD
PL162
9
PEDL140
DL209
PEDL209
L209
ML004
ML004
PEDL208
BECKINGHAM
CORRINGHAM
ML004
PEDL043
PEDL043
PEDL255
PEDL012
EAST
GLENTWORTH
PEDL253
PEDL254
P
PEDL204
PEDL200
PEDL006
PEDL
210
PEDL
210
WEST FIRSBY
PEDL006
COLD HANWORTH
8
P
PEDL201
P
PL220
BOTHAMSALL
REMPSTONE
PEDL007
PL220
SOUTH LEVERTON
ML007
SCAMPTON NORTH
SCAMPTON
PEDL210
PL179
NEWTON-ON-TRENT
NETTLEHAM
FARLEYS WOOD
ML003
PEDL130
PEDL090
EGMANTON
WHISBY
C.E.
PEDL
118
PEDL
203
PEDL202
AK
AKRING
EAKRING
K 7
KIRKLINGTON
KIRKLINGTON
BECKERING
STAINTON
WELTON
FISKERTON AIRFIELD
EXL294
3
PEDL181
6
PEDL241
5
BECKERING
STAINTON
WELTON
FISKERTON AIRFIELD
EXL294
3
EDDD
PEDDD
PEDL005
PEDL005
00
PEDL0DL0
PEDL005
SALTFLEETBY
REVIEW OF
OPERATIONS
Union Jack’s asset
portfolio is well balanced,
combining production,
discovery, appraisal and
exploration.
PEDL255
PEDL208
PEDL254
P
PEDL204
8
PL220
P
PEDL201
P
REMPSTONE
PL220
1
2
3
4
5
6
7
8
9
PEDL180
PEDL182
PEDL005(R)
PEDL339
WRESSLE DISCOVERY
BROUGHTON NORTH
KEDDINGTON OILFIELD
LOUTH
NORTH SOMERCOTES
LOUTH EXTENSION
15%
20%
EXL294
FISKERTON AIRFIELD OILFIELD
20%
PEDL143
HOLMWOOD PROSPECT
PEDL253
BISCATHORPE
PEDL241
NORTH KELSEY
PEDL118
PEDL203
DUKES WOOD
KIRKLINGTON
PEDL201
BURTON ON THE WOLDS
PEDL209
LAUGHTON
4
DL004
ALBURY
BROCKHAM
BROCKH
HA4
PL235
555
PL2353535
7.5%
22%
20%
16.67%
10%
10%
PALMERS WOOD
ML021
PL182
BLETCHINGLEY
PEDL246
ML018
Oilfield/Discovery
Gas Field
Prospect
8
PEDL021
GOODWORTH
PL116
HUMBLY GROVE
PEDL137
EXL189
EXL189
PEDL143
PEDL246
PL233
PL249
STOCKBRIDGE
PEDL070
AVINGTON
PEDL235
PEDL243
PEDL231
PEDL234
PL240
HORNDEAN
PL211
PEDL126
PEDL233
SINGLETON
PL205
STORRINGTON
PL241
LIDSEY
4
DL004
ALBURY
BROCKHAM
BROCKH
HA4
555
PL2353535
PL235
PEDL244
PALMERS WOOD
ML021
PL182
BLETCHINGLEY
PEDL246
ML018
PEDL021
GOODWORTH
PL116
HUMBLY GROVE
PEDL137
EXL189
EXL189
PEDL143
PEDL246
PL233
PL249
STOCKBRIDGE
PEDL070
AVINGTON
PEDL235
PEDL243
PEDL231
PEDL234
PEDL244
PL240
HORNDEAN
PL211
PEDL126
PEDL233
SINGLETON
PL205
STORRINGTON
PL241
LIDSEY
UNION JACK OIL PLC
PEDL146
NORTH SEA
PEDL183
PEDL181
6
PEDL241
PEDL179
8
8
2
L
X
E
PEDL 174
PL162
PL162
PEDL 178
DL 178
D
P
PPP
PEDL182
PEDL173
PEDL180
EXL288
1
6
1
L
D
E
P
TRUMFLEET
PL161
HATFIELD
9
6
1
L
D
E
P
HATFIELD
PL162
9
PEDL146
PEDL043
PEDL043
PEDL140
PEDL209
DL209
L209
ML004
BECKINGHAM
ML004
CORRINGHAM
ML004
PEDL012
PEDL200
EAST
GLENTWORTH
PEDL253
PEDL
210
PEDL006
PEDL
210
WEST FIRSBY
PEDL183
PEDL006
COLD HANWORTH
SOUTH LEVERTON
ML007
SCAMPTON NORTH
SCAMPTON
PEDL007
BOTHAMSALL
PEDL179
PEDL210
PL179
NEWTON-ON-TRENT
NETTLEHAM
PEDL090
EGMANTON
WHISBY
PL162
PL162
FARLEYS WOOD
ML003
PEDL130
8
8
2
L
X
E
PEDL 174
EAKRING
AKRING
AK
K 7
KIRKLINGTON
KIRKLINGTON
PEDL
118
PL161
HATFIELD
PEDL
203
TRUMFLEET
9
6
L
D
E
P
1
PEDL202
HATFIELD
PL162
PEDL 178
DL 178
D
PEDL182
P
PPP
PEDL173
PEDL180
9
BECKERING
STAINTON
WELTON
FISKERTON AIRFIELD
PEDL181
EXL294
3
6
PEDL241
C.E.
EXL288
1
6
1
L
D
E
P
5
PEDL005
PEDDD
EDDD
NORTH SEA
PEDL005
PEDL0DL0
00
PEDL005
SALTFLEETBY
PEDL043
PEDL043
PEDL255
PEDL012
PEDL140
PEDL209
DL209
L209
ML004
BECKINGHAM
PEDL208
CORRINGHAM
ML004
ML004
5
PEDL005
PEDDD
EDDD
PEDL005
PEDL0DL0
00
PEDL005
SALTFLEETBY
EAST
GLENTWORTH
PEDL253
PEDL254
P
PEDL204
PEDL
210
PEDL200
PEDL006
PEDL
210
WEST FIRSBY
PEDL006
COLD HANWORTH
8
PEDL201
P
P
PL220
BOTHAMSALL
REMPSTONE
PEDL007
PL220
SOUTH LEVERTON
ML007
SCAMPTON NORTH
SCAMPTON
PEDL210
PL179
NEWTON-ON-TRENT
NETTLEHAM
BECKERING
STAINTON
WELTON
FISKERTON AIRFIELD
EXL294
3
C.E.
FARLEYS WOOD
ML003
PEDL130
PEDL090
EGMANTON
WHISBY
EAKRING
AKRING
AK
K 7
KIRKLINGTON
KIRKLINGTON
PEDL
118
PEDL
203
PEDL202
PEDL255
PEDL208
PEDL254
P
PEDL204
8
PL220
PEDL201
P
P
REMPSTONE
PL220
PEDL180
PEDL182
WRESSLE
DISCOVERY
PEDL182
BROUGHTON
NORTH
INTEREST HELD BY
UNION JACK OIL PLC
15%
Further acquisitions
have raised Union
Jack’s interest in
PEDL180 and PEDL182
containing the Wressle
hydrocarbon discovery
to 15%.
Oil and gas Reserves
and Contingent
Resources identified by
the Competent Person
in aggregate exceed
the Operator’s original
pre-drill estimates.
PEDL146
PEDL179
EXL288
1
6
1
L
D
E
P
8
8
2
L
X
E
PEDL 174
PL162
PEDL 178
TRUMFLEET
PL161
HATFIELD
9
6
1
L
D
E
P
PEDL182
PEDL173
PEDL180
HATFIELD
PL162
PEDL043
PEDL043
PEDL140
PEDL209
ML004
BECKINGHAM
ML004
CORRINGHAM
ML004
PEDL241
BUSINESS AND STRATEGY
Following two further acquisitions
of interests in PEDL180 and
PEDL182 during 2016 and 2017
respectively, Union Jack now holds
a 15% interest in these licences.
These licences contain the Wressle-1
conventional discovery well from
which first commercial oil is expected
to flow at an initial constrained rate
of approximately 500 barrels a day
following receipt of planning approval.
Located in Lincolnshire, on the
western margin of the Humber
Basin, the above licences contain the
Wressle-1 oil discovery and are on
trend with the nearby discoveries at
Crosby Warren, Brigg and Broughton.
Subsequent to the initial acquisition
of the 8.33% interest, the Wressle
discovery was mapped as extending
into PEDL182 and as a result the
Company acquired, from Egdon,
at no extra cost, an 8.33% interest
in the entire Wressle-1 discovery
mapped over PEDL180 and PEDL182.
In September 2016 the Company
acquired a 3.34% interest in PEDL180
and PEDL182 from Europa Oil &
Gas Limited for a consideration
of £600,000. In addition, during
February 2017 a further 3.33%
interest was acquired from Celtique
Energie Petroleum Limited for
the same consideration.
The results of a Competent Person’s
Report prepared by ERCE were
published in September 2016.
ERCE made independent estimates
of the Reserves, Contingent and
Prospective Resources associated
with the Wressle-1 discovery and
the Broughton North Prospect.
There were several highlights
considered within this
report which included:
• Oil and gas reserves and
Contingent Resources identified
by the Competent Person in
aggregate exceed the Operator’s
original pre-drill estimates
NORTH SEA
PEDL183
PEDL182
Broughton
North
PEDL181
PEDL012
PEDL200
PEDL
210
PEDL006
PEDL
210
WEST FIRSBY
PEDL006
COLD HANWORTH
EAST
GLENTWORTH
PEDL253
PEDL005
PEDL005
PEDL005
SALTFLEETBY
PEDL021
GOODWORTH
PL116
HUMBLY GROVE
PL233
PL249
STOCKBRIDGE
PEDL070
AVINGTON
PEDL235
PEDL243
PEDL231
PEDL234
DL004
4
ALBURY
BROCKHAM
BROCKH
HA4
PL2353535
PL235
555
PALMERS WOOD
ML021
PEDL246
BLETCHINGLEY
ML018
PL182
EXL189
EXL189
PEDL137
PEDL143
PEDL246
PL240
HORNDEAN
PL211
PEDL126
PEDL233
SINGLETON
PL205
STORRINGTON
PEDL021
GOODWORTH
PL116
HUMBLY GROVE
PL241
LIDSEY
DL004
4
ALBURY
BROCKHAM
BROCKH
HA4
PL2353535
PL235
555
PALMERS WOOD
ML021
PEDL246
BLETCHINGLEY
ML018
PL182
EXL189
EXL189
PEDL137
PEDL143
PEDL246
PL233
PL249
STOCKBRIDGE
PEDL070
AVINGTON
PEDL235
PEDL243
PEDL231
PEDL234
PEDL244
PEDL244
PL240
HORNDEAN
PL211
PEDL126
PEDL233
SINGLETON
PL205
STORRINGTON
PL241
LIDSEY
SOUTH LEVERTON
ML007
SCAMPTON NORTH
SCAMPTON
PEDL007
BOTHAMSALL
NEWTON-ON-TRENT
NETTLEHAM
PEDL210
PL179
FARLEYS WOOD
ML003
PEDL130
PEDL090
EGMANTON
WHISBY
C.E.
EAKRING
KIRKLINGTON
PEDL
118
PEDL
203
PEDL202
PEDL255
PEDL208
PEDL254
PEDL204
PL220
PEDL201
REMPSTONE
PL220
BECKERING
STAINTON
WELTON
FISKERTON AIRFIELD
EXL294
PEDL180
PEDL182
Wressle
Discovery
10km
Gas Field
Oil Field/Discovery
Prospect
9
PEDL021
GOODWORTH
PL116
HUMBLY GROVE
PL233
PL249
STOCKBRIDGE
PEDL070
AVINGTON
DL004
ALBURY
BROCKHAM
PL235
PALMERS WOOD
ML021
PEDL246
BLETCHINGLEY
ML018
PL182
EXL189
EXL189
PEDL137
PEDL143
PEDL246
PEDL235
PEDL243
PEDL231
PEDL234
PEDL244
PL240
HORNDEAN
PL211
PEDL126
PEDL233
SINGLETON
PL205
STORRINGTON
PL241
LIDSEY
BUSINESS AND STRATEGYwww.unionjackoil.comUNION JACK OIL PLC
REVIEW OF OPERATIONS
• Gross P Mean Original Oil in Place
(“OOIP”) is 14.8 million stock tank
barrels in aggregate across three
reservoir sands, the Ashover Grit,
Wingfield Flags and Penistone Flags,
of which 2.15 million stock tank
barrels are potentially recoverable
• Gross 2P oil Reserves of 0.62
million stock tank barrels
identified across two reservoir
sands, the Ashover Grit and
Wingfield Flags that form the
basis of the initial development
plan which currently excludes
development of the material
Penistone Flags reservoir sands.
In respect of the Broughton North
Prospect ERCE commented;
• The Broughton North Prospect
has OOIP of 3.43 million stock
tank barrels, gross unrisked
Mean Prospective Resources of
0.51 million stock tank barrels
and 0.51 bcf of gas in aggregate
across two reservoir sands, the
Ashover Grit and Penistone Flags
• Broughton North is a drill-
ready prospect, subject to
obtaining planning permission
• The Broughton North Prospect
benefits from the results of the
Wressle-1 oil and gas discovery
and the Broughton-B1 exploration
well that significantly reduces the
geological risk over PEDL180 and
PEDL182. Consequently ERCE
attributes a high geological COS
with a range of 40% to 49% for
the prospect
• Mapping of the Broughton North
Prospect also benefits from the
same high quality 3D seismic
data as was used to identify the
Wressle-1 oil and gas discovery.
The Wressle-1 well was spudded in
July 2014. The Wressle-1 Prospect
was defined on proprietary 3D
seismic data acquired in 2012,
and the well was drilled as a
deviated well to a total depth
(“TD”) of 2,240 metres and was
designed to intersect a number of
prospective Upper Carboniferous
age sandstone reservoirs in a
structurally favourable position near
the crest of the Wressle structure.
During August 2014, TD was reached
and elevated mud gas readings were
observed over large parts of the
interval from the top of the Penistone
Flags reservoir target (1,831.5 metres
MD- measured depth) to TD.
The well was logged using
measurement whilst drilling (MWD)
logging tools run on the drill string.
Petrophysical evaluation of the
log data indicated the presence of
hydrocarbon pay in three intervals.
• Penistone Flags – up to 19.8 metres
measured thickness
(15.9 metres vertical thickness)
• Wingfield Flags – up to 5.64 metres
measured thickness
(5.1 metres vertical thickness)
• Ashover Grit – up to 6.1 metres
measured thickness
(5.8 metres vertical thickness)
In February 2015, shareholders were
updated on the initial successful Ashover
Grit flow test which recorded 80 bopd
and 47,000 cubic feet of gas per day
during a 16 hour main flow period.
No appreciable volumes of water
were observed. The oil is of good
quality with a gravity of 39-40º API.
Following the Ashover Grit test,
shareholders were updated on the
initial successful Wingfield Flags flow
test which recorded up to 182 bopd
of good quality oil with a gravity
of 39-40º API along with up to
456,000 cubic feet of gas per day.
The next horizon to be flow tested was
the Penistone Flags, the last of three
hydrocarbon bearing zones identified
in the well. The Penistone Flags test
produced gas at restricted flow rates of
up to 1.7 million cubic feet of gas per day
with associated oil of up to 12 bopd and
no free water from a 9 metre perforated
zone at the top of the formation. Gas
flow rates were constrained by the
equipment and flaring limits imposed
by the environmental permit. The
gas and oil are of good quality with
the oil having a gravity of 35º API.
A further test was carried out to evaluate
the gas-oil and oil-water contacts in
the Penistone Flags by perforating the
formation deeper in the section. Zone
3a was perforated over a 7.5 metre
interval and produced good quality oil
with a gravity of 33º API. A total of 98.5
barrels of oil were recovered during the
test, of which flow induced by swabbing
operations produced 34.3 barrels of oil.
This equates to approximately 77 bopd.
The table below show the net volumes of hydrocarbons attributable to Union Jack
GROSS VOLUMES
NET VOLUMES ATTRIBUTABLE TO UNION JACK
OIL MMSTB
GAS BCF
OIL EQUIV
MMBOE
OIL MMSTB
GAS BCF
OIL EQUIV
MMBOE
2P Ashover Grit and
Wingfield Flags
2C Penistone Flags
Broughton North
Mean Unrisked
Prospective Resources
0.62
1.53
0.51
10
0.20
2.00
0.51
0.65
1.86
0.60
0.09
0.23
0.08
0.03
0.30
0.08
0.10
0.28
0.09
ANNUAL REPORT AND FINANCIAL STATEMENTS 2017UNION JACK OIL PLC “”
OIL AND GAS RESERVES
AND CONTINGENT
RESOURCES IDENTIFIED
BY THE COMPETENT
PERSON IN AGGREGATE
EXCEED THE OPERATOR’S
ORIGINAL PRE-DRILL
ESTIMATES.
The Penistone Flags Zone 3a interval
was pumped for a period of time
and achieved average rates over a
three day period of 131 bopd and
222,000 cubic feet of gas per day,
together totalling 168 barrels of
oil equivalent per day (“boepd”)
with an average producing gas oil
ratio of approximately 1,700 cubic
feet of gas per barrel of oil.
Due to increasing gas rates, the pump
was then stopped and the well allowed
to naturally flow to surface with a
series of decreasing choke sizes from
12/64” down to 8/64” (being the
smallest available). Average rates over
a two day period on the 8/64” choke
were 105 bopd with 465,000 cubic
feet of gas per day, together totalling
182 boepd.
Following the Extended Well Test on
Zone 3a, it was noted that both oil
and gas had flowed without evidence
of any water. Encouragingly, the well
test data together with the log data
indicate that the elevation of the oil
water contact is deeper than originally
considered for the Penistone Flags
reservoir.
In January 2018 an appeal against
the refusal of planning permission
for the development of Wressle
was declined. After the joint venture
partners had taken appropriate
planning, legal, commercial and
technical advice and having fully
considered information previously
provided by the Planning Inspector
the operator has submitted a new
planning application for the extension
of planning for a further year.
A second application will be submitted
for the development of the Wressle
oil discovery to the North Lincolnshire
Council during May 2018.
The joint venture partners remain fully
committed to the future development
of Wressle and the new application
will address points previously raised by
Planning Inspector.
Confidence remains that the Wressle
development will be brought to
production status and all credible
avenues to achieve this objective will
be pursued. An Environment Agency
permit for production is in place.
On this basis the licence costs are not
impaired in these financial statements.
THE INTERESTS IN PEDL180 AND PEDL182 ARE HELD BY:
Egdon Resources U.K. Limited (operator)
Celtique Energie Petroleum Limited
Europa Oil & Gas Limited
Union Jack Oil plc
25.0%
30.0%
30.0%
15.0%
11
BUSINESS AND STRATEGYwww.unionjackoil.comUNION JACK OIL PLC REVIEW OF OPERATIONS
PEDL005(R)
KEDDINGTON
PEDL339
LOUTH
EXTENSION
INTEREST HELD BY
UNION JACK OIL PLC
20%
Producing oilfield with
increased production
potential from two
additional prospects.
Louth Prospect
extends into PEDL339.
In July 2015, Union Jack agreed to
acquire a 10% interest from Egdon in
PEDL005(R) located in Lincolnshire
and incorporating the Keddington
oilfield, the Louth oil prospect and
the North Somercotes gas prospect.
Under the terms of the acquisition
agreement Union Jack agreed
to pay 20% of the costs of the
Keddington-5 sidetrack development
well drilled in January 2016 and
the proposed Louth exploration
well. The Company has not paid
any upfront cash to earn the 10%
economic interest in PEDL005(R).
PEDL146
PEDL179
EXL288
1
6
1
L
D
E
P
8
8
2
L
X
E
PEDL 174
PL162
PEDL 178
TRUMFLEET
PL161
HATFIELD
9
6
1
L
D
E
P
PEDL182
PEDL173
PEDL180
HATFIELD
PL162
PEDL043
PEDL043
PEDL140
PEDL209
ML004
BECKINGHAM
ML004
CORRINGHAM
ML004
Under the terms of the agreement
Union Jack has also earned a 10%
interest from Egdon in PEDL339, which
contains the mapped extension to
the Louth Prospect. This licence was
awarded to the existing Joint Venture
group in the UK 14th Landward Oil and
Gas Licensing Round.
In October 2017, the Company acquired
a further 10% in PEDL005(R) via the
purchase of the entire onshore portfoio
of Cairn Energy plc.
KEDDINGTON OILFIELD
Union Jack owns a 20% interest
in Keddington and the associated
infrastructure and production facilities.
Union Jack receives 20% of all
production revenues. The partners in
Keddington are seeking to maximise
the value of the “Greater Keddington”
area through two additional prospects
located within PEDL005(R), namely the
Louth oil and the North Somercotes gas
prospects. As part of the acquisition,
Union Jack also holds a 20% interest in
both of these prospects.
Keddington has produced in excess of
300,000 barrels of oil to date and is
currently producing approximately 30
bopd from the Keddington-3Z well.
Testing of the Keddington-5 sidetrack
well, drilled in 2016, saw production
dominated by formation water and plans
are being considered to target undrained
reservoir sequences.
LOUTH PROSPECT
The Louth oil prospect is located mostly
within PEDL005(R) and extends into
PEDL339. Located on the margins of the
Humber Basin, the prospect is defined
on reprocessed 3D seismic data and is
estimated by the operator to contain a
STOIIP of 5.5 million barrels and gross
mean Prospective Resources of 1.2
million barrels with an attractive COS
of 37%.
NORTH SOMERCOTES
Located on the margins of the Humber
Basin, the North Somercotes gas
prospect is within PEDL005(R) to the
north of the Saltfleetby gasfield and is
estimated by the operator to contain
gross mean Prospective Resources of
11.0 billion cubic feet of gas and to have
a COS of 25%.
THE INTERESTS IN PEDL005(R) ARE HELD BY:
Egdon Resources
U.K. Limited (operator)
Terrain Energy Limited
NORTH SEA
Union Jack Oil plc
PEDL183
KEDDINGTON
OILFIELD
PEDL005(R)
EXCLUDING KEDDINGTON
45.0%
35.0%
20.0%
65.0%
15.0%
20.0%
PEDL181
PEDL005(R)
Louth Prospect
PEDL241
PEDL005(R)
North
Somercotes
Prospect
PEDL005
PEDL005
PEDL005
SALTFLEETBY
PEDL012
PEDL200
PEDL
210
PEDL006
PEDL
210
WEST FIRSBY
PEDL006
COLD HANWORTH
EAST
GLENTWORTH
PEDL253
SOUTH LEVERTON
ML007
SCAMPTON NORTH
SCAMPTON
PEDL007
BOTHAMSALL
NEWTON-ON-TRENT
NETTLEHAM
PEDL210
PL179
FARLEYS WOOD
ML003
PEDL130
PEDL090
EGMANTON
WHISBY
BECKERING
STAINTON
WELTON
FISKERTON AIRFIELD
EXL294
C.E.
EAKRING
KIRKLINGTON
PEDL
118
PEDL
203
PEDL202
PEDL255
PEDL208
PEDL254
PEDL204
PL220
PEDL201
REMPSTONE
PL220
PEDL005(R)
Keddington
Oilfield
10km
Gas Field
Oil Field/Discovery
Prospect
12
PEDL021
GOODWORTH
PL116
HUMBLY GROVE
PL233
PL249
STOCKBRIDGE
PEDL070
AVINGTON
DL004
ALBURY
BROCKHAM
PL235
PALMERS WOOD
ML021
PEDL246
BLETCHINGLEY
ML018
PL182
EXL189
EXL189
PEDL137
PEDL143
PEDL246
PEDL235
PEDL243
PEDL231
PEDL234
PEDL244
PL240
HORNDEAN
PL211
PEDL126
PEDL233
SINGLETON
PL205
STORRINGTON
PL241
LIDSEY
ANNUAL REPORT AND FINANCIAL STATEMENTS 2017UNION JACK OIL PLC
EXL294
FISKERTON
AIRFIELD
OILFIELD
INTEREST HELD BY
UNION JACK OIL PLC
20%
Workovers underway
on two production
wells.
3D seismic processing
ongoing.
In November 2017, Union Jack
acquired a 20% economic interest
in EXL294 containing the producing
Fiskerton Airfield oilfield.
EXL294 is located approximately
seven miles East of the City of
Lincoln. Fiskerton was discovered
in 1997 and cumulative production
has totalled approximately
440,000 barrels of oil from
the most likely mapped Oil in
Place of 2.2 million barrels.
Fiskerton was producing approximately
16 barrels of oil per day from one of
two production wells (FA-3). The second
production well (FA-1) had been shut in
for several months. Workovers of FA-1
and FA-3 were successfully completed
in the period January to March 2018.
There is also a dedicated water
disposal well (FA-2) to re-inject any
produced water into the reservoir for
pressure support.
Fiskerton has suffered from a marked
lack of investment by its previous
owners over the past few years.
Production operations have resumed
at Fiskerton and initial field production,
prior to further optimisation and
further operations during the coming
period, including the increasing of
the pumping rate, is approaching
30 bopd of good quality (35.2° API
gravity) oil, a significant increase on
the pre-workover rate of 16 bopd.
Oil production since resumption of
operations to date exceeds 1,250 barrels
gross and product is being sold and
transported by road tanker to a refinery
at Immingham, North East Lincolnshire.
The Company’s initial review of
historic 3D seismic suggests there is
upside potential in the oil resources
at Fiskerton. Union Jack are funding
a 3D re-processing exercise over an
area surrounding Fiskerton to identify
further production opportunities from
the reservoir. Results from this exercise
will be available during H1 2018. Subject
to the results of the 3D seismic re-
processing , the joint venture partners
will investigate the potential to increase
further production through infill drilling.
THE INTERESTS IN EXL294 ARE HELD BY:
Egdon Resources UK Limited (operator)
Union Jack Oil plc
80%
20%
PEDL146
NORTH SEA
PEDL183
PEDL181
PEDL179
EXL288
1
6
1
L
D
E
P
8
8
2
L
X
E
PEDL 174
PL162
PEDL 178
TRUMFLEET
PL161
HATFIELD
9
6
1
L
D
E
P
PEDL182
PEDL173
PEDL180
HATFIELD
PL162
PEDL043
PEDL043
PEDL140
PEDL209
ML004
BECKINGHAM
ML004
PEDL012
PEDL200
PEDL
210
PEDL006
PEDL241
CORRINGHAM
EXL294
Fiskerton
Airfield
Oilfield
EAST
GLENTWORTH
ML004
PEDL
210
WEST FIRSBY
PEDL006
COLD HANWORTH
PEDL005
PEDL005
PEDL253
PEDL005
SALTFLEETBY
SOUTH LEVERTON
ML007
SCAMPTON NORTH
SCAMPTON
PEDL007
BOTHAMSALL
NEWTON-ON-TRENT
NETTLEHAM
PEDL210
PL179
FARLEYS WOOD
ML003
PEDL130
PEDL090
EGMANTON
WHISBY
BECKERING
STAINTON
WELTON
FISKERTON AIRFIELD
EXL294
C.E.
EAKRING
KIRKLINGTON
PEDL
118
PEDL
203
PEDL202
PEDL255
PEDL208
PEDL254
PEDL204
PL220
PEDL201
REMPSTONE
PL220
10km
Gas Field
Oil Field/Discovery
Prospect
13
PEDL021
GOODWORTH
PL116
HUMBLY GROVE
PL233
PL249
STOCKBRIDGE
PEDL070
AVINGTON
DL004
ALBURY
BROCKHAM
PL235
PALMERS WOOD
ML021
PEDL246
BLETCHINGLEY
ML018
PL182
EXL189
EXL189
PEDL137
PEDL143
PEDL246
PEDL235
PEDL243
PEDL231
PEDL234
PEDL244
PL240
HORNDEAN
PL211
PEDL126
PEDL233
SINGLETON
PL205
STORRINGTON
PL241
LIDSEY
BUSINESS AND STRATEGYwww.unionjackoil.comUNION JACK OIL PLC
PEDL146
NORTH SEA
PEDL179
EXL288
1
6
1
L
D
E
P
8
8
2
L
X
E
PEDL 174
PL162
PEDL 178
TRUMFLEET
PL161
HATFIELD
PEDL182
PEDL173
PEDL180
PEDL183
PEDL181
REVIEW OF OPERATIONS
PL162
HATFIELD
PEDL241
9
6
1
L
D
E
P
PEDL043
PEDL043
PEDL140
PEDL209
PEDL005
CORRINGHAM
ML004
BECKINGHAM
ML004
ML004
PEDL012
PEDL143
HOLMWOOD
PROSPECT
PEDL090
PEDL006
PEDL200
PEDL007
NEWTON-ON-TRENT
PEDL
210
SOUTH LEVERTON
ML007
BOTHAMSALL
FARLEYS WOOD
EAST
GLENTWORTH
WEST FIRSBY
PEDL006
COLD HANWORTH
PEDL
210
SCAMPTON NORTH
SCAMPTON
PEDL210
BECKERING
STAINTON
WELTON
PL179
NETTLEHAM
FISKERTON AIRFIELD
EXL294
PEDL130
ML003
EGMANTON
WHISBY
C.E.
EAKRING
INTEREST HELD BY
UNION JACK OIL PLC
7.5%
PEDL202
PEDL
203
PEDL
118
KIRKLINGTON
PEDL255
PEDL208
PEDL254
PEDL204
The first Weald Basin
licence interest to Union
Jack’s expanding UK
onshore portfolio.
PEDL201
PL220
PL220
REMPSTONE
Unrisked gross mean
prospective resources of
5.6 million barrels from
the shallower sandstone
reservoirs only.
In May 2016, Union Jack entered
into an agreement with the
Operator, Europa to acquire
a 7.5% economic interest in
PEDL143 located within the
Weald Basin in southern England
and containing the drill-ready
Holmwood Prospect.
During 2015 planning permission
was obtained for both the
surface well location and
underground wellpath for the
Holmwood-1 exploration
well currently expected to
be drilled in late 2018.
PEDL253
SALTFLEETBY
PEDL005
PEDL005
The Holmwood Prospect is a
conventional oil prospect first
identified by BP in 1988, and is
estimated by the Operator to hold
gross mean unrisked prospective
resources of 5.6 million barrels of
oil in the Portlandian and Corallian
sandstones with a geological COS
of 50%. The P90 – P10 range of
prospective resources is 1 to 11
million barrels of oil which is the
typical range for the Weald Basin,
based on the 14 oil and gas fields
that have been discovered and
produced in the Weald Basin to date.
The Holmwood Prospect lies 12
kilometres immediately to the west
of, and on trend with, the Horse
Hill-1 discovery well in PEDL137
where earlier in 2016 UK Oil & Gas
Investments PLC and its partners
reported excellent flow rates from
test production from the Upper
Portland sandstone reservoir and
the Upper and Lower Kimmeridge
limestone reservoirs. The Holmwood
Prospect also lies approximately five
kilometres south of the Brockham
oilfield that produces from the
Portland sandstone reservoir.
The Holmwood-1 exploration well
will penetrate similar stratigraphy to
the Horse Hill-1 discovery, including
the possibility that oil may be
encountered in the Jurassic Upper
and Lower Kimmeridge Micrites,
in addition to its principal targets
in the Corallian and Portlandian
sandstone. Possible resources within
the Jurassic limestones, equivalent
to those at the Horse Hill-1
discovery have not been estimated
in the Operator’s mean unrisked
prospective resources forecast of
5.6 million barrels of oil and so
offer further upside potential.
A two year extension was granted
by the Oil and Gas Authority
(“OGA”) to 1 October 2018
in respect of this licence.
An application will be made in
due course to the OGA for a
further licence extension.
THE INTERESTS IN PEDL143 ARE HELD BY:
Europa Oil and Gas Limited (operator)
UK Oil & Gas Investments PLC
Egdon Resources UK Limited
Angus Energy plc
Union Jack Oil plc
Altwood Petroleum Limited
20.0%
40.0%
18.4%
12.5%
7.5%
1.6%
10km
Gas Field
Oil Field/Discovery
Prospect
PEDL021
GOODWORTH
PL116
HUMBLY GROVE
DL004
ALBURY
BROCKHAM
PL235
PALMERS WOOD
ML021
PL182
BLETCHINGLEY
PEDL246
ML018
PEDL137
EXL189
EXL189
PEDL143
PEDL246
PL233
PL249
STOCKBRIDGE
PEDL070
AVINGTON
PEDL235
PEDL243
PEDL231
PEDL234
PL240
HORNDEAN
PL211
PEDL126
PEDL233
SINGLETON
PL205
STORRINGTON
PL241
LIDSEY
PEDL244
PEDL143
Holmwood
Prospect
14
ANNUAL REPORT AND FINANCIAL STATEMENTS 2017UNION JACK OIL PLC
PEDL253
BISCATHORPE
INTEREST HELD BY
UNION JACK OIL PLC
22%
Drill-ready prospect
expected to be drilled
around mid-year 2018
adding considerable risk
adjusted value.
In March 2013, Union Jack
entered into an agreement with
Egdon, the licence operator,
and Montrose Industries Limited
(“Montrose”) to acquire a 10%
interest in PEDL253 containing the
Biscathorpe Prospect. During June
2015, Union Jack subsequently
acquired an additional 2%
interest pro-rata from Egdon and
Montrose bringing the Company’s
interest to 12%.
In March 2018 the Company
acquired a further 10% economic
interest pro-rata from Egdon and
Montrose bringing the interest
held to 22%.
PEDL146
PEDL253 is located in Lincolnshire,
within the proven hydrocarbon fairway
of the Humber Basin, on trend with the
Saltfleetby gasfield and the Keddington
oilfield which produces oil from the
Upper Carboniferous Westphalian
aged reservoir sandstones.
The Biscathorpe Prospect is a well-
defined four way dip closed structure
mapped from recently reprocessed
3D seismic and adds considerable
risk adjusted value that also offers
lower geological risk than a pure
exploration well given that a prior well,
Biscathorpe-1, encountering oil bearing
sands, has already been drilled.
The Biscathorpe structure was initially
drilled and tested by BP in 1987 with the
Biscathorpe-1 well which encountered
a 1.2 metre thick, oil-bearing sandstone
of lower Westphalian age within a 24
metre gross sequence. Biscathorpe-2
will be located in a direction towards
a potentially thicker sand development
within the structural closure of the trap.
The sand unit is predicted to thicken
away from the crest of the structure
and the operator’s Best Estimate
is a gross Prospective Resource of
14 million barrels of oil, with a COS
of 40%, within the mapped structural
closure. There is also the potential for
stratigraphic trapping to the west which,
if present, could increase the expected
gross Prospective Resources to circa
35 million barrels of oil. The same sand
unit is the producing reservoir in the
Keddington oilfield in which Union Jack
has acquired a 20% interest.
A subsurface target location to evaluate
the exploration potential of the
Biscathorpe Prospect and a surface
drilling location have been identified
from which a vertical well to a depth
of 2,100 metres can be drilled.
In March 2015, planning consent
was granted for the drilling and any
subsequent testing of the Biscathorpe-2
exploration well.
Drilling of the Biscathorpe-2
conventional exploration well was
sanctioned in February 2018 by the joint
venture partners and is planned to be
drilled around mid-year 2018.
The date of expiry of the licence is
30 June 2018.
An extension to the licence term has
been requested from the OGA by the
operator.
THE INTERESTS IN PEDL253 ARE HELD BY:
Egdon Resources U.K. Limited (operator)
Montrose Industries Limited
Union Jack Oil plc
NORTH SEA
Humber Oil & Gas Limited
35.8%
22.2%
22.0%
20.0%
PEDL183
PEDL181
PEDL179
EXL288
1
6
1
L
D
E
P
8
8
2
L
X
E
PEDL 174
PL162
PEDL 178
TRUMFLEET
PL161
HATFIELD
9
6
1
L
D
E
P
PEDL182
PEDL173
PEDL180
HATFIELD
PL162
PEDL043
PEDL043
PEDL140
PEDL209
ML004
BECKINGHAM
ML004
CORRINGHAM
ML004
PEDL241
PEDL012
PEDL200
PEDL
210
PEDL006
PEDL
210
WEST FIRSBY
PEDL006
COLD HANWORTH
EAST
GLENTWORTH
PEDL253
SOUTH LEVERTON
ML007
SCAMPTON NORTH
SCAMPTON
PEDL007
BOTHAMSALL
NEWTON-ON-TRENT
NETTLEHAM
PEDL210
PL179
FARLEYS WOOD
ML003
PEDL130
PEDL090
EGMANTON
WHISBY
BECKERING
STAINTON
WELTON
FISKERTON AIRFIELD
EXL294
C.E.
EAKRING
KIRKLINGTON
PEDL
118
PEDL
203
PEDL202
PEDL255
PEDL208
PEDL254
PEDL204
PL220
PEDL201
REMPSTONE
PL220
PEDL253
Biscathorpe
10km
Gas Field
Oil Field/Discovery
Prospect
PEDL005
PEDL005
PEDL005
SALTFLEETBY
15
PEDL021
GOODWORTH
PL116
HUMBLY GROVE
PL233
PL249
STOCKBRIDGE
PEDL070
AVINGTON
DL004
ALBURY
BROCKHAM
PL235
PALMERS WOOD
ML021
PEDL246
BLETCHINGLEY
ML018
PL182
EXL189
EXL189
PEDL137
PEDL143
PEDL246
PEDL235
PEDL243
PEDL231
PEDL234
PEDL244
PL240
HORNDEAN
PL211
PEDL126
PEDL233
SINGLETON
PL205
STORRINGTON
PL241
LIDSEY
BUSINESS AND STRATEGYwww.unionjackoil.comUNION JACK OIL PLC
REVIEW OF OPERATIONS
PEDL241
NORTH KELSEY
INTEREST HELD BY
UNION JACK OIL PLC
20%
Drill-ready multi-target
prospect.
Union Jack holds a 20% interest
in PEDL241 containing the
North Kelsey Prospect. The
initial holding was 10% which
was acquired from Egdon, the
operator, during 2013 on a two
for one promote agreement
whereby Union Jack earned its
interest by bearing an increased
share of certain costs.
PEDL146
PEDL179
EXL288
1
6
1
L
D
E
P
8
8
2
L
X
E
PEDL 174
PL162
PEDL 178
TRUMFLEET
PL161
HATFIELD
9
6
1
L
D
E
P
PEDL182
PEDL173
PEDL180
HATFIELD
PL162
PEDL043
PEDL043
PEDL140
PEDL209
ML004
BECKINGHAM
ML004
CORRINGHAM
ML004
PEDL241
In June 2015 Celtique Energie
Petroleum Limited relinquished its
interest in PEDL241 and the Company
acquired pro-rata a further 10%
interest for a nominal consideration
and without promote.
PEDL241 is located within the
proven hydrocarbon fairway of
the Humberside platform. The
North Kelsey Prospect is located
approximately 10 kilometres to the
south of the Wressle-1 discovery
in PEDL180.
The prospect is defined on 3D
seismic data and has the potential
for up to four stacked sandstone
reservoirs in the Chatsworth,
Beacon Hill, Raventhorpe and Santon
sandstones. The nearby Crosby
Warren oilfield and the Brigg oil
discovery are productive from the
Upper Carboniferous Namurian
aged reservoirs.
The gross mean combined Prospective
Resources for these multiple
objectives, as calculated by Egdon,
are estimated to be 6.7 million barrels
of oil.
The subsurface target location to
evaluate the exploration of the North
Kelsey Prospect has been defined and
a surface drilling location has been
identified from which a vertical well
can be drilled.
In December 2014, the Planning and
Regulation Committee of Lincolnshire
County Council granted planning
consent for the drilling of, and any
subsequent testing of, the North
Kelsey-1 well.
The date of expiry of the licence is
30 June 2018.
An extension to the licence term has
been requested from the OGA by the
operator.
THE INTERESTS IN PEDL241 ARE HELD BY:
Egdon Resources U.K. Limited (operator)
Union Jack Oil plc
NORTH SEA
PEDL183
PEDL241
North Kelsey
PEDL181
80.0%
20.0%
PEDL005
PEDL005
PEDL005
SALTFLEETBY
PEDL012
PEDL200
PEDL
210
PEDL006
PEDL
210
WEST FIRSBY
PEDL006
COLD HANWORTH
EAST
GLENTWORTH
PEDL253
SOUTH LEVERTON
ML007
SCAMPTON NORTH
SCAMPTON
PEDL007
BOTHAMSALL
NEWTON-ON-TRENT
NETTLEHAM
PEDL210
PL179
FARLEYS WOOD
ML003
PEDL130
PEDL090
EGMANTON
WHISBY
BECKERING
STAINTON
WELTON
FISKERTON AIRFIELD
EXL294
C.E.
EAKRING
KIRKLINGTON
PEDL
118
PEDL
203
PEDL202
PEDL255
PEDL208
PEDL254
PEDL204
PL220
PEDL201
REMPSTONE
PL220
10km
Gas Field
Oil Field/Discovery
Prospect
16
PEDL021
GOODWORTH
PL116
HUMBLY GROVE
PL233
PL249
STOCKBRIDGE
PEDL070
AVINGTON
DL004
ALBURY
BROCKHAM
PL235
PALMERS WOOD
ML021
PEDL246
BLETCHINGLEY
ML018
PL182
EXL189
EXL189
PEDL137
PEDL143
PEDL246
PEDL235
PEDL243
PEDL231
PEDL234
PEDL244
PL240
HORNDEAN
PL211
PEDL126
PEDL233
SINGLETON
PL205
STORRINGTON
PL241
LIDSEY
ANNUAL REPORT AND FINANCIAL STATEMENTS 2017UNION JACK OIL PLC
PEDL118
DUKES WOOD
PEDL203
KIRKLINGTON
INTEREST HELD BY
UNION JACK OIL PLC
16.67%
Various studies are
ongoing on both
licences to identify
reservoir zones
containing previously
undrained resources.
These licence interests contain
previously producing oilfields
that are currently shut-in and
Union Jack acquired them
in October 2017 when it
purchased Cairn Energy plc’s
entire onshore UK portfolio for
a consideration of £25,000.
PEDL118 DUKES WOOD
OILFIELD (16.67%)
PEDL118 contains the Dukes Wood
oilfield originally discovered by a
predecessor company to BP in 1939.
The oilfield was decommissioned in
1966 having produced approximately
6.5 million barrels of oil from a mapped
25.6 million barrels of oil in place
representing a recovery factor of 24.5%.
The Dukes Wood-1 well was drilled in
2010 and encountered three reservoir
zones, the Ashover Grit, Crawshaw
sandstone and Loxley Edge Rock,
all of which were flow tested.
PEDL203 KIRKLINGTON
OILFIELD (16.67%)
PEDL203 contains the Kirklington
oilfield that was originally discovered
by BP in 1985 and produced oil from
two Carboniferous reservoirs.
The Kirklington-3 and 3-Z sidetrack
wells were drilled in 2010 and produced
oil from only one of nine potential pay
zones until mid 2013. The Kirklington
3-Z well is currently shut in and
production facilities have been preserved
on a care and maintenance basis.
Should a future production decision
be taken, the existing production
facilities can be made production
ready once remedial work has been
conducted to site equipment.
Various studies are currently ongoing
at both Kirklington and Dukes Wood
to identify reservoir zones containing
previously unproduced or undrained
resources, and also to evaluate
completion and enhanced recovery
operations, both mechanical and
chemical, which could be applied to
the unswept oil reservoirs that are
present that could justify re-establishing
production from either oilfield.
THE INTERESTS IN PEDL118 AND PEDL203 ARE HELD BY:
Egdon Resources UK Limited (operator)
PEDL146
Terrain Energy Limited
Union Jack Oil plc
NORTH SEA
55.55%
27.78%
16.67%
PEDL183
PEDL181
PEDL179
EXL288
1
6
1
L
D
E
P
8
8
2
L
X
E
PEDL 174
PL162
PEDL 178
TRUMFLEET
PL161
HATFIELD
9
6
1
L
D
E
P
PEDL182
PEDL173
PEDL180
HATFIELD
PL162
PEDL043
PEDL043
PEDL140
PEDL209
ML004
BECKINGHAM
ML004
CORRINGHAM
ML004
PEDL241
PEDL012
PEDL200
PEDL
210
PEDL006
PEDL118
Dukes Wood
PEDL007
SOUTH LEVERTON
ML007
EAST
GLENTWORTH
PEDL253
PEDL
210
WEST FIRSBY
PEDL006
COLD HANWORTH
SCAMPTON NORTH
SCAMPTON
PEDL210
PL179
STAINTON
WELTON
BECKERING
PEDL005
PEDL005
PEDL005
SALTFLEETBY
BOTHAMSALL
NEWTON-ON-TRENT
NETTLEHAM
FARLEYS WOOD
ML003
PEDL130
PEDL090
EGMANTON
WHISBY
FISKERTON AIRFIELD
EXL294
C.E.
EAKRING
KIRKLINGTON
PEDL
118
PEDL
203
PEDL202
PEDL255
PEDL208
PEDL203
Kirklington
PEDL254
PEDL204
PL220
PEDL201
REMPSTONE
PL220
10km
Gas Field
Oil Field/Discovery
Prospect
17
PEDL021
GOODWORTH
PL116
HUMBLY GROVE
PL233
PL249
STOCKBRIDGE
PEDL070
AVINGTON
DL004
ALBURY
BROCKHAM
PL235
PALMERS WOOD
ML021
PEDL246
BLETCHINGLEY
ML018
PL182
EXL189
EXL189
PEDL137
PEDL143
PEDL246
PEDL235
PEDL243
PEDL231
PEDL234
PEDL244
PL240
HORNDEAN
PL211
PEDL126
PEDL233
SINGLETON
PL205
STORRINGTON
PL241
LIDSEY
BUSINESS AND STRATEGYwww.unionjackoil.comUNION JACK OIL PLC
PEDL201
BURTON ON THE WOLDS
INTEREST HELD BY
UNION JACK OIL PLC
10%
Significant Bowland-
Hodder Shale potential.
Drilling operations were completed in
October 2014 on the Burton on the
Wolds-1 well located on PEDL201
in Leicestershire which was drilled
on a geological feature known as
the Hathern Shelf, a stable platform
area, evaluating a conventional oil
prospect in the Rempstone sand,
productive at the Rempstone
oilfield to the west of PEDL201.
The well encountered the Rempstone
sand in the primary reservoir which
was water wet and as a result the
well was plugged and abandoned.
However, a thickness of Bowland
Shale was encountered during
drilling, which according to
studies undertaken by the British
Geological Survey, has potential for
unconventional resources of shale oil
or gas if buried to greater depths.
PEDL146
The results of the Weatherford
analysis and the BGS studies suggest
an unconventional shale play is present
under the retained part of PEDL201.
Awards of licences adjacent to PEDL201
to other parties under the 14th Round,
offer encouragement regarding the
unconventional play within the area
under licence.
The directors are considering their
options to generate cash inflows from
this development. As unconventional
potential has been highlighted in the
licence area, of which the potential
revenues would exceed costs, no
impairment is considered appropriate
at this time whilst further evaluation is
planned and budgeted.
Drill cutting samples of the Bowland
Shale source rock collected at the well
were sent for analysis to Houston
based Weatherford Laboratories
to determine source rock quality.
Weatherford are recognised experts
in source rock evaluation.
Following analysis, Weatherford
concluded that the Upper Bowland-
Hodder Shale interval in the Burton
on the Wolds well from the East
Midlands region of the UK is a very
good source rock containing dominantly
oil prone Type 11 organic matter.
The Bowland Shale at the site of
the Burton on the Wolds-1 well is
deemed, not unsurprisingly, to be
thermally immature owing to its
shallow depth. Source rock maturity
is a function of heat flow, burial depth
and time. To the north of the well
location is the Hoton Fault which
forms the southern boundary of
the Widmerpool Trough. Regional
well correlations show the Bowland
Shale to be buried at a much greater
depth and is believed to be thermally
mature for hydrocarbon generation.
THE INTERESTS IN PEDL201 ARE HELD BY:
Egdon Resources UK Limited (operator)
Celtique Energie Petroleum Limited
Terrain Energy Limited
NORTH SEA
Union Jack Oil plc
PEDL183
45.0%
32.5%
12.5%
10.0%
PEDL179
EXL288
1
6
1
L
D
E
P
8
8
2
L
X
E
PEDL 174
PL162
PEDL 178
TRUMFLEET
PL161
HATFIELD
9
6
1
L
D
E
P
PEDL182
PEDL173
PEDL180
HATFIELD
PL162
PEDL043
PEDL043
PEDL140
PEDL209
ML004
BECKINGHAM
ML004
CORRINGHAM
ML004
PEDL181
PEDL241
PEDL012
PEDL200
PEDL
210
PEDL006
PEDL
210
WEST FIRSBY
PEDL006
COLD HANWORTH
EAST
GLENTWORTH
PEDL253
SOUTH LEVERTON
ML007
SCAMPTON NORTH
SCAMPTON
PEDL007
BOTHAMSALL
NEWTON-ON-TRENT
NETTLEHAM
PEDL210
PL179
FARLEYS WOOD
ML003
PEDL130
PEDL090
EGMANTON
WHISBY
BECKERING
STAINTON
WELTON
FISKERTON AIRFIELD
EXL294
C.E.
PEDL
118
PEDL
203
PEDL202
EAKRING
KIRKLINGTON
PEDL201
Burton on the
Wolds
PEDL255
PEDL208
10km
PEDL005
PEDL005
PEDL005
SALTFLEETBY
PEDL254
PEDL204
PL220
PEDL201
REMPSTONE
PL220
Gas Field
Oil Field/Discovery
Prospect
18
PEDL021
GOODWORTH
PL116
HUMBLY GROVE
PL233
PL249
STOCKBRIDGE
PEDL070
AVINGTON
DL004
ALBURY
BROCKHAM
PL235
PALMERS WOOD
ML021
PEDL246
BLETCHINGLEY
ML018
PL182
EXL189
EXL189
PEDL137
PEDL143
PEDL246
PEDL235
PEDL243
PEDL231
PEDL234
PEDL244
PL240
HORNDEAN
PL211
PEDL126
PEDL233
SINGLETON
PL205
STORRINGTON
PL241
LIDSEY
ANNUAL REPORT AND FINANCIAL STATEMENTS 2017UNION JACK OIL PLC
PEDL209
LAUGHTON
INTEREST HELD BY
UNION JACK OIL PLC
10%
Two additional
conventional prospects
and hydrocarbon potential
to be further evaluated.
In January 2016, Union Jack acquired
from Egdon Resources plc a 10%
interest in PEDL209 in respect of
the conventional prospects only
within the licence area for no
upfront consideration.
PEDL209 is located along the eastern
side of the Gainsborough Trough,
a proven hydrocarbon province
within the East Midlands and
contained the Laughton Prospect.
of the wireline log data indicated that
the hydrocarbon saturations associated
with the shows were not sufficiently
encouraging to warrant testing.
The rig was released from contract
and the wellsite has been fully
restored to its original condition.
Total costs of £303,789 have been
impaired with regard to PEDL209
over the life of the holding.
The drilling of the Laughton-1
well completed the farm-in deal
between Egdon and Union Jack and
also the work commitment for the
licence’s first term which allowed it
to proceed into its second term.
Two further conventional
prospects within PEDL209 and the
remaining hydrocarbon potential
are to be further evaluated.
The Laughton Prospect had multiple
conventional Carboniferous sandstone
targets with the primary objective
being the Silkstone Rock, a sandstone
interval which is productive in the
analogous Corringham oilfield located
five kilometres to the south east.
Two other potential reservoirs,
the Kilburn Sandstone and the
Wingfield Flags, were also targeted
by the Laughton-1 well.
In February 2016, the Laughton-1 well
was spudded, targeting a structural
trap at a depth of over 1,500 metres
below ground level defined on
re-processed 2D seismic data.
The Laughton-1 well reached a total
depth of 1,700 metres in line with
the pre-drill prognosis. During drilling,
the well recorded hydrocarbon shows
from a number of potential reservoir
sequences including the Kilburn
Sandstone, Chatsworth Grit, Ashover
Grit and Kinderscout Grit. The
Silkstone Rock primary objective was
poorly developed in the well. Analysis
PEDL146
THE CONVENTIONAL INTERESTS IN PEDL209 ARE HELD BY:
Egdon Resources UK Limited (operator)
Blackland Park Exploration Limited
Stelinmatvic Industries Limited
NORTH SEA
Union Jack Oil plc
PEDL183
38.0%
28.0%
24.0%
10.0%
PEDL179
EXL288
1
6
1
L
D
E
P
8
8
2
L
X
E
PEDL 174
PL162
PEDL 178
TRUMFLEET
PL161
HATFIELD
9
6
1
L
D
E
P
PEDL182
PEDL173
PEDL180
HATFIELD
PL162
PEDL043
PEDL043
PEDL140
PEDL209
ML004
BECKINGHAM
ML004
CORRINGHAM
ML004
PEDL181
PEDL241
PEDL012
PEDL200
PEDL
210
PEDL006
PEDL
210
WEST FIRSBY
PEDL006
COLD HANWORTH
EAST
GLENTWORTH
PEDL253
SOUTH LEVERTON
ML007
SCAMPTON NORTH
SCAMPTON
PEDL007
BOTHAMSALL
NEWTON-ON-TRENT
NETTLEHAM
PEDL210
PL179
FARLEYS WOOD
ML003
PEDL130
PEDL090
EGMANTON
WHISBY
BECKERING
STAINTON
WELTON
FISKERTON AIRFIELD
EXL294
C.E.
EAKRING
KIRKLINGTON
PEDL
118
PEDL
203
PEDL202
PEDL209
Laughton
PEDL005
PEDL005
PEDL005
SALTFLEETBY
PEDL255
PEDL208
10km
PEDL254
PEDL204
PL220
PEDL201
REMPSTONE
PL220
Gas Field
Oil Field/Discovery
Prospect
19
PEDL021
GOODWORTH
PL116
HUMBLY GROVE
PL233
PL249
STOCKBRIDGE
PEDL070
AVINGTON
DL004
ALBURY
BROCKHAM
PL235
PALMERS WOOD
ML021
PEDL246
BLETCHINGLEY
ML018
PL182
EXL189
EXL189
PEDL137
PEDL143
PEDL246
PEDL235
PEDL243
PEDL231
PEDL234
PEDL244
PL240
HORNDEAN
PL211
PEDL126
PEDL233
SINGLETON
PL205
STORRINGTON
PL241
LIDSEY
BUSINESS AND STRATEGYwww.unionjackoil.comUNION JACK OIL PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2017
The directors present their report together with the
financial statements for the year ended 31 December 2017.
The directors have chosen, in accordance with section
414C(11) of the Companies Act 2006, to set out in the
Company’s Strategic Report information required by
Schedule 7 to the Accounting Regulations to be contained
in the Directors’ Report. This information includes future
developments of the Company and the risks associated
with the use of financial instruments.
DIRECTORS
The directors in office at the end of the year, and their
interests in the shares of the Company as at 1 January 2017
and 31 December 2017, were as shown in the table below.
ORDINARY SHARES
31 December
2017
1 January
2017
52,164,580
52,164,580
118,870,063
118,870,063
30,764,706
30,764,706
D Bramhill
J O’Farrell
R Godson
G Bull
DIRECTORS’ REMUNERATION
The remuneration of the directors for the year ended
31 December 2017 and the year ended 31 December 2016
was as follows:
D Bramhill
J O’Farrell
R Godson
G Bull
SALARIES AND FEES
2016
£
2017
£
86,667
50,000
25,000
25,000
80,000
50,000
25,000
25,000
Directors’ remuneration is disclosed in note 3 of these
financial statements.
Copies of the Service Agreements in respect of D Bramhill
and J O’Farrell are available for inspection at the Company’s
Registered Office. Copies of the Letters of Appointment in
respect of G Bull and R Godson are available for inspection
at the Company’s Registered Office.
4,000,000
4,000,000
ANNUAL GENERAL MEETING
The Annual General Meeting of the Company will be held
on 31 May 2018 in accordance with the Notice of Annual
General Meeting on page 51. Details of the resolutions to
be passed are included in this notice.
In March 2018, Joe O’Farrell purchased 58,823,529 new
ordinary shares, following which he now holds a beneficial
interest in 177,693,592 ordinary shares representing
approximately 3.06% of the share capital of the Company.
In March 2018, David Bramhill purchased 11,764,705 new
ordinary shares, following which he now holds a beneficial
interest in 63,929,285 ordinary shares representing
approximately 1.1% of the share capital of the Company.
These shares have not been included in the above table
of interests.
Directors who served during the year are as follows:
David Bramhill (Executive Director);
Joseph O’Farrell (Executive Director);
Raymond Godson (Non-executive Director);
Graham Bull (Non-executive Director).
20
ANNUAL REPORT AND FINANCIAL STATEMENTS 2017UNION JACK OIL PLC
EVENTS AFTER THE BALANCE SHEET DATE
The following events have taken place after the year end:
DISCLOSURE OF INFORMATION TO THE
AUDITOR
In March 2018, 1,470,588,226 new ordinary shares
were issued for cash at 0.085 pence per share raising
approximately £1,250,000 before expenses of £100,588.
The enlarged issued share capital following the issue of new
shares described in this section is 5,803,651,431 ordinary
shares of 0.025 pence each.
In March 2018 the Company entered into a Commercial
Partnership with UK based Humber Oil & Gas Limited and a
Memorandum of Understanding was signed by both parties
whereby the two companies have agreed to co-invest in
selective UK upstream projects.
In March 2018 the Company entered into a Farm-in
Agreement with Egdon Resources U.K. Limited and
Montrose Industries Limited to acquire a further 10%
interest in PEDL253 containing the drill-ready Biscathorpe-2
Prospect. Following this the Company now holds a 22%
economic interest in the licence.
In March 2018, Joe O’Farrell purchased 58,823,529 new
ordinary shares, following which he now holds a beneficial
interest in 177,693,592 ordinary shares representing
approximately 3.06% of the share capital of the Company.
The directors at the date of the approval of this Annual
Report confirm that:
•
•
so far as the directors are aware, there is no relevant
audit information of which the Company’s auditor
is unaware; and
the directors have taken all the steps that they ought
to have taken as directors in order to make themselves
aware of any relevant audit information and to establish
that the Company’s auditor is aware of that information.
This confirmation is given and should be interpreted
in accordance with the provisions of Section 418 of
the Companies Act 2006.
AUDITOR
A resolution to reappoint BDO LLP will be proposed
at the forthcoming Annual General Meeting.
COMPANY NAME AND REGISTERED NUMBER
The registered number of Union Jack Oil plc is 07497220.
On behalf of the Board
In March 2018, David Bramhill purchased 11,764,705 new
ordinary shares, following which he now holds a beneficial
interest in 63,929,285 ordinary shares representing
approximately 1.1% of the share capital of the Company.
David Bramhill
Executive Chairman
1 May 2018
CAPITAL STRUCTURE
Details of the issued share capital, together with details
of the movements in the Company’s issued share capital
during the year, are shown in note 13(a).
21
GOVERNANCEwww.unionjackoil.comUNION JACK OIL PLC CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2017
The Company’s securities are traded on the AIM Market
of the London Stock Exchange (“AIM”). The Company
has considered the Quoted Company Alliance (“QCA”)
corporate governance guidelines for AIM companies
relevant to the Company but due to the size and nature
of its current business has not adopted the UK Corporate
Governance Code in its entirety.
INTERNAL FINANCIAL CONTROL
The directors are responsible for establishing and
maintaining the Company’s internal financial control
systems. These are designed to meet the particular needs
of the Company and the risks to which it is exposed, and
by their nature can provide reasonable but not absolute
assurance against material misstatement or loss.
THE BOARD
During the year the Board of Directors of Union Jack Oil
plc consisted of two executive directors and two non-
executive directors as disclosed within the Directors,
Officers and Advisers section of this report, who were
responsible for the proper management of the Company.
The Board met in person or by telephone, as permitted
by the current Articles of Association, three times during
the year. In addition, the Board held numerous project
appraisal and strategy discussions during the year.
The Board will meet at least four times in the coming
year to review trading performance and budgets,
ensure adequate funding, set and monitor strategy,
examine acquisition opportunities and report to
shareholders. The Board has a formal schedule of
matters specifically reserved to it for decisions.
The key procedures that the directors have established
to provide effective internal financial controls are:
•
Identification of Business Risks
The Board is responsible for identifying the major
business risks faced by the Company and for
determining the appropriate course of action
to manage these risks.
•
Investment Appraisal
Capital expenditure is regulated by authorisation limits.
For expenditure beyond the specified limits including
investments in exploration projects, detailed proposals
are submitted to the Board for review and sign-off.
• Financial Reporting
The Company has a comprehensive system for
reporting financial results to the Board.
REMUNERATION COMMITTEE
• Audit Committee
The Audit Committee considers and determines
relevant action in respect of any control issues raised
by the external auditor.
The Remuneration Committee comprises Graham Bull,
who acts as its Chairman, and Raymond Godson.
The current executive director remuneration package
comprises basic salary only. Directors’ remuneration
for the year is noted in the Directors’ Report and shown
in note 3 on page 38.
Those disclosures form part of this report.
The remuneration of non-executive directors is determined
by the Board.
AUDIT COMMITTEE
The Audit Committee comprises Raymond Godson,
who acts as its Chairman, and Graham Bull. The
Committee is responsible for considering a wide range
of financial matters.
This Committee also provides a forum for reporting
by the Company’s auditor. The executive directors may
attend meetings by invitation.
22
ANNUAL REPORT AND FINANCIAL STATEMENTS 2017UNION JACK OIL PLC
DIRECTORS’ RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2017
The directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Company’s transactions and disclose with
reasonable accuracy at any time the financial position of
the Company and enable them to ensure that the financial
statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The directors are responsible for ensuring the annual
report and the financial statements are made available
on a website. Financial statements are published on
the Company’s website in accordance with legislation
in the United Kingdom governing the preparation and
dissemination of financial statements, which may vary
from legislation in other jurisdictions. The maintenance
and integrity of the Company’s website is the responsibility
of the directors. The directors’ responsibility also extends
to the ongoing integrity of the financial statements
contained therein.
The directors are responsible for preparing the Annual
Report and the Financial Statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the
directors have elected to prepare the Company financial
statements in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European
Union. Under company law the directors must not approve
the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the
Company and of the profit or loss of the Company
for that period. The directors are also required to prepare
financial statements in accordance with the rules of the
London Stock Exchange for companies trading securities
on the Alternative Investment Market. In preparing these
financial statements the directors are required to:
•
select suitable accounting policies and then apply them
consistently;
• make judgements and accounting estimates that are
reasonable and prudent;
•
state whether they have been prepared in accordance
with IFRSs as adopted by the European Union, subject
to any material departures disclosed and explained in
the financial statements;
• prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
company will continue in business.
23
GOVERNANCEwww.unionjackoil.comUNION JACK OIL PLC INDEPENDENT AUDITOR’S REPORT
ON THE FINANCIAL STATEMENTS
TO THE MEMBERS OF UNION JACK OIL PLC
OPINION
USE OF OUR REPORT
We have audited the financial statements of Union Jack Oil
plc (the ‘Company’) for the year ended 31 December 2017
which comprise the Company statement of comprehensive
income, the Company statement of financial position, the
Company statement of changes in equity, the Company
statement of cash flows and notes to the financial
statements, including a summary of significant accounting
policies.
The financial reporting framework that has been applied
in the preparation of the Company financial statements
is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union.
In our opinion:
•
•
•
the financial statements give a true and fair view of the
state of the Company’s affairs as at 31 December 2017;
the Company financial statements have been properly
prepared in accordance with IFRSs as adopted by the
European Union; and
the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
BASIS FOR OPINION
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit
of the financial statements section of our report. We
are independent of the Company in accordance with the
ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical
Standard as applied to listed entities and we have fulfilled
our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for
our opinion.
This report is made solely to the Company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken
so that we might state to the Company’s members those
matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the Company’s
members as a body, for our audit work, for this report, or
for the opinions we have formed.
CONCLUSIONS RELATING TO GOING CONCERN
We have nothing to report in respect of the following
matters in relation to which the ISAs (UK) require us to
report to you where:
•
•
the directors’ use of the going concern basis of
accounting in the preparation of the financial statements
is not appropriate; or
the directors have not disclosed in the financial
statements any identified material uncertainties that
may cast significant doubt about Company’s ability to
continue to adopt the going concern basis of accounting
for a period of at least twelve months from the date
when the financial statements are authorised for issue.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the
financial statements of the current period and include the
most significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including those
which had the greatest effect on the overall audit strategy,
the allocation of resources in the audit and directing the
efforts of the engagement team. These matters were
addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
24
ANNUAL REPORT AND FINANCIAL STATEMENTS 2017UNION JACK OIL PLC CARRYING VALUE OF OIL AND GAS ASSETS
Our specific audit testing for the D&P assets included:
The Company’s oil and gas assets are classified as intangible
assets where the Company has exploration and evaluation
interests (“E&E”) and as property, plant and equipment
where the Company has development and producing
interests (“D&P”). The Company’s oil and gas assets are
considered to represent the most significant assets on its
balance sheet and total £3.3m as at 31 December 2017.
In respect of both the Company’s E&E assets and the D&P
assets Management and the Directors are required to assess
for any indicators of impairment of the assets.
Given the significance of the assets on the Company’s
balance sheet and the significant management judgement
involved in the assessment of the carrying values of the
assets there is an increased risk of material misstatement.
•
•
•
the verification of licence status in order to confirm legal
title and validity of each of the licences;
reviewing the external and internal sources of
information, such as third party reports and reporting
provided by operators in order to assess whether any
potential impairment triggers were present;
reviewing third party reports and Management
estimates relating to the assessment of the potential
recoverable value of the assets. As part of this work we
sensitised inputs used in models and benchmarked data
to external sources of information, and
• made an assessment of the competence of the expert
management relied upon.
OUR RESPONSE
In respect of both the E&E assets and D&P assets we
evaluated Management’s and the Board’s impairment
review for each of the assets held. We critically challenged
the considerations made of whether or not there were
any indicators of impairment identified in accordance with
relevant accounting standards.
Our specific audit testing for the E&E assets included:
•
•
•
•
the verification of licence status in order to confirm legal
title and validity of each of the licences;
reviewing activity to assess whether there was evidence
from technical work undertaken to date by Management
and third parties which would indicate a potential
impairment trigger;
reviewing approved budget forecasts and minutes
of Management and Board meetings to confirm the
Company’s intention to continue exploration work on
the licences, and
in order to obtain an understanding of Management’s
expectation of commercial viability, we reviewed
available technical documentation and discussed results
and operations with Management.
25
GOVERNANCEwww.unionjackoil.comUNION JACK OIL PLC INDEPENDENT AUDITOR’S REPORT ON THE FINANCIAL STATEMENTS
TO THE MEMBERS OF UNION JACK OIL PLC
OUR APPLICATION OF MATERIALITY
Company materiality as at
31 December 2017
£75,000 (2016: £71,000)
Basis for materiality
1.5% of total assets
We apply the concept of materiality both in planning
and performing our audit and in evaluating the effect of
misstatements. We consider materiality to be the magnitude
by which misstatements, including omissions, could influence
the economic decisions of reasonable users that are taken
on the basis of the financial statements. Importantly,
misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the
nature of identified misstatements, and the particular
circumstances of their occurrence, when evaluating their
effect on the financial statements as a whole.
We consider total assets to be the most relevant
consideration of the Company’s financial performance as
the Company continues to focus on building its oil and gas
asset portfolio.
In performing the audit we applied a lower level of
performance materiality in order to reduce to an
appropriately low level the probability that the aggregate
of uncorrected and undetected misstatements exceeds
financial statement materiality. Performance materiality for
the financial statements was set at £56,000 (2016: £53,000),
being 75% of financial statement materiality.
We agreed with the Audit Committee that we would
report to the Committee all individual audit differences
identified during the course of our audit in excess of £3,000
(2016: £3,550). There were no misstatements identified
during the course of our audit that were individually, or
in aggregate, considered to be material in terms of their
absolute monetary value or on qualitative grounds.
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
We performed a full scope audit on the financial statements
of the Company.
All audit work was undertaken by BDO LLP.
OTHER INFORMATION
The directors are responsible for the other information.
The other information comprises the information included
in the annual report, other than the financial statements
and our auditor’s report thereon. Our opinion on the
financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in
our report, we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing
so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to
determine whether there is a material misstatement in the
financial statements or a material misstatement of the other
information. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact. We have
nothing to report in this regard.
OPINIONS ON OTHER MATTERS PRESCRIBED BY
THE COMPANIES ACT 2006
In our opinion, based on the work undertaken in the course
of the audit:
•
•
the information given in the Strategic Report and
the Directors’ Report for the financial year for which
the financial statements are prepared is consistent
with the financial statements; and
the Strategic Report and the Directors’ Report have
been prepared in accordance with applicable legal
requirements.
26
ANNUAL REPORT AND FINANCIAL STATEMENTS 2017UNION JACK OIL PLC MATTERS ON WHICH WE ARE REQUIRED TO
REPORT BY EXCEPTION
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT
OF THE FINANCIAL STATEMENTS
In the light of the knowledge and understanding of the
Company and its environment obtained in the course of the
audit, we have not identified material misstatements in the
Strategic Report or the Directors’ Report.
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the
Company, or returns adequate for our audit have not
been received from branches not visited by us; or
•
the Company financial statements are not in agreement
with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified
by law are not made; or
• we have not received all the information and
explanations we require for our audit.
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when
it exists.
Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit
of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our
auditor’s report.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the Directors’ Responsibilities
Statement set out on page 23, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to
enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Company’s ability to continue
as a going concern, disclosing, as applicable, matters related
to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
group or the parent company or to cease operations, or
have no realistic alternative but to do so.
27
GOVERNANCEwww.unionjackoil.comUNION JACK OIL PLC INDEPENDENT AUDITOR’S REPORT ON THE FINANCIAL STATEMENTS
TO THE MEMBERS OF UNION JACK OIL PLC
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT
OF THE FINANCIAL STATEMENTS
This report is made solely to the Company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken
so that we might state to the Company’s members those
matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the Company’s
members as a body, for our audit work, for this report, or
for the opinions we have formed.
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when
it exists.
Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit
of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our
auditor’s report.
Anne Sayers, Senior Statutory Auditor
for and on behalf of BDO LLP, Statutory Auditor, London,
United Kingdom
1 May 2018
BDO LLP is a limited liability partnership registered in
England and Wales (with registered number OC305127).
28
ANNUAL REPORT AND FINANCIAL STATEMENTS 2017UNION JACK OIL PLC INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2017
Notes
31.12.17
£
31.12.16
£
Revenue
Cost of sales
Gross loss
Administrative expenses (excluding impairment charge)
Impairment
Total adminstrative expenses
Operating loss
Finance income
Loss before taxation
Taxation
Loss for the financial year
Attributable to:
Equity shareholders of the Company
Loss per share
Basic and diluted loss per share (pence)
2
2
4
5
6
46,203
(65,949)
22,119
(22,696)
(19,746)
(577)
(722,502)
(5,078)
(598,075)
(298,711)
(744,902)
(896,786)
(747,326)
(897,363)
504
5,654
(746,822)
(891,709)
–
(885)
(746,822)
(892,594)
(746,822)
(892,594)
(0.02)
(0.03)
The accompanying accounting policies and notes form an integral part of these financial statements.
29
www.unionjackoil.comUNION JACK OIL PLC FINANCIAL STATEMENTS
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2017
Loss for the financial year
Other comprehensive income
31.12.17
£
31.12.16
£
(746,822)
–
(892,594)
–
Total comprehensive loss for the financial year
(746,822)
(892,594)
The accompanying accounting policies and notes form an integral part of these financial statements.
30
ANNUAL REPORT AND FINANCIAL STATEMENTS 2017UNION JACK OIL PLC
BALANCE SHEET
AS AT 31 DECEMBER 2017
Assets
Non-current assets
Exploration and evaluation assets
Property, plant and equipment
Investments
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Liabilities
Current liabilities
Trade and other payables
Non-current liabilities
Provisions
Total liabilities
Net assets
Notes
31.12.17
£
31.12.16
£
7
8
10
11
12
19
20
2,806,278
496,859
40,000
2,079,340
–
40,000
3,343,137
2,119,340
65,872
1,578,514
62,700
1,861,964
1,644,386
1,924,664
4,987,523
4,044,004
310,079
85,312
229,918
18,000
539,997
103,312
4,447,526
3,940,692
2,954,547
5,379,670
61,438
(3,948,129)
2,696,399
4,566,072
167,924
(3,489,703)
4,447,526
3,940,692
Capital and reserves attributable to the
Company’s equity shareholders
Share capital
Share premium
Share-based payments reserve
Accumulated deficit
13(a)
14
14
14
Total equity
The financial statements of Union Jack Oil plc, registered number 07497220, were approved and authorised for issue
by the Board of Directors on 1 May 2018 and were signed on its behalf by:
David Bramhill
Director
The accompanying accounting policies and notes form an integral part of these financial statements.
31
www.unionjackoil.comUNION JACK OIL PLC FINANCIAL STATEMENTS
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2017
Share Accumulated
deficit
capital
£
£
Share
premium
£
Share-based
payment
reserve
£
Total
£
Balance at 1 January 2017
2,696,399
(3,489,703)
4,566,072
167,924
3,940,692
Total comprehensive loss
–
(746,822)
–
–
(746,822)
Contributions by and
distributions to owners
Issue of share capital
Share issue costs
Prior period exercised and expired warrants
Current year expired share warrants
258,148
–
–
–
–
–
215,366
–
1,135,849
(140,342)
(114,074)
5,194
–
–
(101,292)
(5,194)
1,393,997
(140,342)
–
–
Total contributions by and
distributions to owners
258,148
288,395
813,598
(106,486) 1,253,675
Balance at 31 December 2017
2,954,547
(3,948,129)
5,379,670
61,438
4,447,526
Balance at 1 January 2016
2,593,458
(2,597,109)
4,042,698
167,924
4,206,971
Total comprehensive loss
–
(892,594)
–
–
(892,594)
Contributions by and
distributions to owners
Issue of share capital
Share issue costs
Total contributions by and
distributions to owners
102,941
–
–
–
597,059
(73,685)
–
–
700,000
(73,685)
102,941
–
523,374
–
626,315
Balance at 31 December 2016
2,696,399
(3,489,703)
4,566,072
167,924
3,940,692
During 2015, 280,600,000 warrants expired however no transfer was made to from the Share-Based Payment reserve to
the Accumulated Deficit account.
£114,074 in respect of warrants that expired in 2015 were incorrectly credited to the Share Premium account instead of
the Accumulated Deficit account, where the share issue costs had initially been recognised.
As this correction constitutes a reclassification within equity reserves, there is no impact of the total equity balance as
at 31 December 2017.
The accompanying accounting policies and notes form an integral part of these financial statements.
32
ANNUAL REPORT AND FINANCIAL STATEMENTS 2017UNION JACK OIL PLC
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2017
Notes
31.12.17
£
31.12.16
£
Cash flow from operating activities
Cash flow from investing activities
Purchase of intangible assets
Purchase of property, plant and equipment
Interest received
15
7
8
(503,331)
(694,601)
(872,482)
(161,797)
504
(1,153,715)
–
5,654
Net cash used in investing activities
(1,033,775)
(1,148,061)
Cash flow from financing activities
Proceeds on issue of new shares
Cost of issuing new shares
13(a)
13(a)
1,393,997
(140,342)
700,000
(73,685)
Net cash generated from financing activities
1,253,655
626,315
Net decrease in cash and cash equivalents
(283,450)
(1,216,347)
Cash and cash equivalents at beginning of financial year
1,861,964
3,078,311
Cash and cash equivalents at end of financial year
12
1,578,514
1,861,964
The accompanying accounting policies and notes form an integral part of these financial statements.
33
www.unionjackoil.comUNION JACK OIL PLC FINANCIAL STATEMENTS
PRINCIPAL ACCOUNTING POLICIES
Union Jack Oil plc is a company incorporated in the United
Kingdom under the Companies Act 2006. The address
of the registered office is 6 Charlotte Street, Bath BA1
2NE, England. The nature of the Company’s operations and
its principal activities are set out in the Directors’ Report,
Strategic Report and Review of Operations. These financial
statements are presented in pounds sterling because that is
the currency of the primary economic environment in which
the Company operates.
BASIS OF PREPARATION
The annual financial statements of Union Jack Oil plc
(“the Company”) have been prepared in accordance
with International Financial Reporting Standards (“IFRS”)
as adopted by the European Union (“EU”) applied in
accordance with the provisions of the Companies Act 2006.
IFRS is subject to amendment and interpretation by the
International Accounting Standards Board (“IASB”) and
the IFRS Interpretations Committee, and there is an ongoing
process of review and endorsement by the European
Commission. These accounting policies comply with each
IFRS that is mandatory for accounting periods ending on
31 December 2017.
The financial statements have been prepared under the
historical cost convention except for the valuation of certain
warrants for shares. The principal accounting policies set out
below have been consistently applied to all periods presented.
GOING CONCERN
The Company’s business activities, together with the factors
likely to affect its future development, performance and
position are set out in the Chairman’s Statement, Review of
Operations and the Strategic Report. The directors’ forecasts
demonstrate that the Company will meet its day-to-day
working capital and share of estimated drilling costs over the
forecast period (being at least 12 months from the date the
financial statements were approved) from the cash held on
deposit on 31 December 2017 and funds raised subsequent
to the year end. The principal risk to the Company’s working
capital position is drilling cost overruns. The Company has
sufficient funding to meet planned drilling expenditures
and a level of contingency. Taking account of these risks,
sensitised forecasts show that the Company should be able
to operate within the level of funds currently held. The
directors have a reasonable expectation that the Company
has adequate resources to continue in operational existence
for the foreseeable future. Thus they continue to adopt the
going concern basis of accounting in preparing the financial
statements.
REVENUES
Revenues represent amounts receivable for the sale of crude
oil, net of taxes, and are recognised on delivery to a third
party storage facility on behalf of a customer.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash on hand and
deposits held at call with banks.
FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are recognised on
the Balance Sheet when the Company becomes a party
to the contractual provisions of the instrument.
Trade and other receivables are initially measured at fair
value, and are subsequently measured at amortised cost
using the effective interest method.
Trade and other payables are initially measured at fair value,
and are subsequently measured at amortised cost using the
effective interest rate method.
INTANGIBLE ASSETS - EXPLORATION AND
EVALUATION ASSETS
Costs (including research costs) incurred prior to obtaining
the legal rights to explore an area will be expensed
immediately to the Income Statement, as these are classified
as pre-licence costs.
Expenditure incurred on the acquisition of a licence interest
will initially be capitalised on a licence-by-licence basis.
Costs will be held within exploration and evaluation costs
until such a time as the exploration phase on the licence area
is complete or commercial reserves have been discovered.
Exploration expenditure incurred in the process of
determining exploration targets will be capitalised initially
within intangible assets as exploration and evaluation costs.
Exploration costs will initially be capitalised whilst exploration
and evaluation activities are continuing, and until the success
or otherwise has been established. The success or failure of
each exploration/evaluation effort will be judged generally on
a licence-by-licence basis. Capitalised costs will be written off
on completion of exploration and evaluation activities unless
the results indicate that hydrocarbon reserves exist and that
these reserves are commercially viable.
All such costs will be subject to regular technical, commercial
and management review for indicators of impairment
which includes confirming the continued intent to develop
or otherwise extract value from the licence, prospect or
discovery. Where this is no longer the case, the costs will
be immediately expensed.
Following evaluation of successful exploration wells, if
commercial reserves are established and the technical
feasibility of extraction is demonstrated, and once a project
is sanctioned for commercial development, then the related
capitalised exploration/evaluation costs will be transferred
into a single field cash generating units within development/
producing assets after testing for impairment, within Property,
Plant and Equipment. Where results of exploration drilling
indicate the presence of hydrocarbons which are ultimately
not considered commercially viable, all related costs will be
written off to the Income Statement.
PROPERTY, PLANT AND EQUIPMENT -
DEVELOPMENT AND PRODUCTION ASSETS
Development and production (“D&P”) assets are accumulated
into cash generating units ("CGU") and represent the cost of
developing the commercial reserves and bringing them into
production together with the E&E expenditures previously
transferred from E&E assets as outlined in the policy above.
34
ANNUAL REPORT AND FINANCIAL STATEMENTS 2017UNION JACK OIL PLC PRINCIPAL ACCOUNTING POLICIES
All costs incurred after the technical feasibility and commercial
viability of producing hydrocarbons have been demonstrated
will be capitalised within development/producing assets on a
field-by-field basis. Subsequent expenditure will be capitalised
only where it either enhances the economic benefits of the
development/producing asset or replaces part of the existing
development/producing asset.
On acquisition of a D&P asset from a third party, the asset
will be recognised in the financial statements on signature
of the sale and purchase agreement, subject to satisfaction
of any substantive conditions within the agreement.
Costs relating to each CGU are depleted on a unit of
production method based on the commercial Proven and
Probable Reserves for that CGU. Development assets are not
depreciated until production commences. The depreciation
calculation takes account of the residual value of site
equipment and the estimated future costs of development of
recognised Proven and Probable Reserves, based on current
price levels. Changes in reserve quantities and cost estimates
are recognised prospectively.
DECOMMISSIONING AND SITE RESTORATION
PROVISIONS
Licensees have an obligation to restore fields to a condition
acceptable to the relevant authorities at the end of their
commercial lives.
Provision for decommissioning and reinstatement is recognised
in full as a liability and an asset when the obligation arises.
The asset is included within exploration and evaluation
assets or property, plant and equipment as is appropriate.
The liability is included within provisions.
The amount recognised is the estimated cost of
decommissioning and reinstatement, discounted where
appropriate to its net present value, and is reassessed each
year in accordance with local conditions and requirements.
Revisions to the estimated costs of decommissioning and
reinstatement which alter the level of the provisions required
are also reflected in adjustments to the decommissioning and
reinstatement asset.
The increase in the net present value of the future cost arising
from the unwinding of the discount is included within finance
costs.
CONTINGENT LIABILITIES
Contingent consideration payable in respect of the Company’s
interest in certain licences is considered to be a contingent
liability, which is not recognised due to the lack of estimation
certainty of both the timing and amount payable.
IMPAIRMENT
The carrying amounts of non-current assets are reviewed
for impairment if events or changes in circumstances indicate
the carrying value may not be recoverable. If there are
indicators of impairment, such as a well not encountering
commercial quantities of oil or a site being shut-in, an exercise
is undertaken to determine whether the carrying values are in
excess of their recoverable amount. Such review is undertaken
on an asset by asset basis, except where such assets do not
generate cash flows independent of other assets, in which case
the review is undertaken at the cash generating unit level on
a field-by-field basis. For intangible exploration and evaluation
assets potential impairment triggers may include the short
term expiry of a licence, lack of budgeted spend, or the lack
of potential for commercial development of the asset. The
potential recoverable value of such assets is assessed by the
directors based on their knowledge of the assets and available
information. The Company’s cash-generating units are the
smallest identifiable groups of assets that generate cash
inflows that are largely independent of the cash inflows
from other assets or groups of assets.
A previously recognised impairment loss is reversed if the
recoverable amount increases as a result of a reversal of
the conditions that originally resulted in the impairment.
This reversal is recognised in the profit and loss account
and is limited to the carrying amount that would have been
determined, net of depreciation, had no impairment loss been
recognised in the prior years.
The recoverable amount of assets is the greater of their value
in use and fair value less costs to sell. In assessing value in
use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks
specific to the asset. For an asset that does not generate cash
inflows largely independent of those from other assets, the
recoverable amount is determined for the cash-generating unit
to which the asset belongs.
Impairments are recognised in the income statement to the
extent that the carrying amount exceeds the assets’ carrying
amount. The revised carrying amounts are amortised in line
with the Company’s accounting policies.
FARM-INS AND PROFIT-SHARING AGREEMENTS
The Company accounts for its own assets, liabilities and
cash flows measured in accordance with the terms of the
production sharing agreement and the accounting treatment
reflects the agreement’s commercial effect. The Company’s
turnover and cost of sales include revenues and operating
costs associated with the Company’s interest.
JOINT ARRANGEMENTS
The Company is party to a joint arrangement when there
is a contractual agreement that sets out the terms of the
relationship over the relevant activities of the Company
and at least one other party.
The Company classifies its interests in joint arrangements
as joint operations: where the Company has both the
rights to assets and obligations for the liabilities of the joint
arrangement.
The Company accounts for its interests in joint operations
by recognising its share of assets, liabilities, revenues and
expenses in accordance with its contractually conferred rights
and obligations.
35
www.unionjackoil.comUNION JACK OIL PLC FINANCIAL STATEMENTS PRINCIPAL ACCOUNTING POLICIES
CURRENT TAX
Current tax is based on taxable profit for the year. Taxable profit
differs from net profit as reported in the Income Statement
because it excludes items of income or expense that are taxable
or deductible in other years and it further excludes items that
are never taxable or deductible. The Company’s liability for
current tax is calculated using tax rates that have been enacted
or substantively enacted by the Balance Sheet date.
DEFERRED TAX
Deferred tax is the tax expected to be payable or recoverable
on differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding
tax bases used in the computation of taxable profit, and is
accounted for using the Balance Sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the
extent that it is probable that taxable profits will be available
against which deductible temporary differences can be utilised.
Such assets and liabilities are not recognised if the temporary
difference arises from the initial recognition of goodwill or from
the initial recognition (other than in a business combination)
of other assets and liabilities in a transaction that affects neither
the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each
Balance Sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised based on tax laws and rates that have been enacted or
substantively enacted at the Balance Sheet date. Deferred tax
is charged or credited in the Income Statement, except when
it relates to items charged or credited in other comprehensive
income, in which case the deferred tax is also dealt with in other
comprehensive income.
Deferred tax assets and liabilities are offset when there
is a legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Company intends to
settle its current tax assets and liabilities on a net basis.
EQUITY INSTRUMENTS
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by the Company are
recognised at the proceeds received, net of direct issue costs.
SHARE-BASED PAYMENTS – WARRANTS
Equity-settled share-based payments in respect of warrants
for professional services are measured at the fair value of the
equity instruments at the grant date, on the basis that this
is immaterially different from the fair value of the services
provided. Details regarding the determination of the fair value
of equity-settled share-based transactions are set out in note
13(b). The fair value determined at the grant date of the equity-
settled share-based payments is expensed on a straight-line basis
over the vesting period, based on the Company’s estimate of
the number of equity instruments that will eventually vest. At
each Balance Sheet date, the Company revises its estimate of
the number of equity instruments expected to vest as a result of
the effect of non-market-based vesting conditions. The impact
of the revision of the original estimates, if any, is recognised in
the Income Statement such that the cumulative expense reflects
the revised estimate, with a corresponding adjustment to equity
reserves. When a warrant expires, the cumulative expense
recognised In the share based payment reserve is reversed
to the relevant component of equity In line with the original
recognition of the expense.
INVESTMENTS
Investments represent available-for-sale investments and are
initially held at fair value and are subsequently measured at fair
value or at cost where fair value is not readily ascertainable.
Gains and losses arising from changes in fair value are recognised
directly in equity until the investment is disposed of or is
determined to be impaired, at which time the cumulative gain
or loss recognised previously in equity is included in the net
profit or loss for the year.
ADOPTION OF NEW AND REVISED INTERNATIONAL
FINANCIAL REPORTING STANDARDS
Other than minor changes to standards arising from annual
improvements, there have been no new or revised standards
adopted in the preparation of the financial statements for
the current financial year that have had any material impact
on the financial statements of the Company.
The following EU-adopted revised or new standards have yet to
be adopted by the Company. These standards will be adopted
for the years ended 31 December 2018 and
31 December 2019 as shown below:
•
•
•
IFRS 9 Financial Instruments (2018)
IFRS 15 Revenue from contracts with customers (2018)
IFRS 16 Leases (2019)
IFRS 9 ‘Financial Instruments’ will supersede IAS 39 ‘Financial
Instruments: Recognition and Measurement’ and is effective
for annual periods beginning on or after 1 January 2018. IFRS
9 covers classification and measurement of financial assets and
financial liabilities, impairment of financial assets and hedge
accounting.
IFRS 15 ‘Revenue from Contracts with Customers’ provides
a single model for accounting for revenue arising from contracts
with customers, focusing on the identification and satisfaction
of performance obligations, and is effective for annual periods
beginning on or after 1 January 2018. IFRS 15 will supersede
IAS 18 ‘Revenue’.
The Company adopted IFRS 9 and IFRS 15 on 1 January 2018.
The Company’s evaluation of the effect of adoption of the
standard is ongoing but it is not currently expected that it will
have a material effect on the Company’s financial statements,
as the basis on which revenue is recognised is not considered
complex and the Company does not currently have financial
instruments which would be materially affected by the
accounting amendments brought in by IFRS 9.
36
ANNUAL REPORT AND FINANCIAL STATEMENTS 2017UNION JACK OIL PLC PRINCIPAL ACCOUNTING POLICIES
The Company has decided to classify all of its equity
investments as being at fair value through other comprehensive
income under IFRS 9, which are currently measured at cost
in the Balance Sheet. This will mean that all changes in the
fair value of such assets up to the point of disposal will be
recorded in other comprehensive income. Therefore, in
contrast to the current accounting treatment, significant or
prolonged declines in value below cost will not be recognised
in the income statement, and the income statement will not
reflect gains or losses on disposal because gains and losses
recognised in other comprehensive income will not be recycled
to profit or loss on any such disposal.
IFRS 16 ‘Leases’ provides a new model for lessee accounting
in which all leases, other than short-term and small-ticket-
item leases, will be accounted for by the recognition on the
balance sheet of a right-to-use asset and a lease liability, and
the subsequent amortisation of the right-to-use asset over
the lease term. IFRS 16 will be effective for annual periods
beginning on or after 1 January 2019.
The Company expects to adopt IFRS 16 on 1 January 2019.
The Company’s evaluation of the effect of adoption of the
standard is ongoing but it is not currently expected that it will
have a material effect on the Company’s financial statements,
as the Company does not hold any leases at the date of sign
off of these financial statements.
There are no other standards and interpretations in issue
but not yet adopted that the directors anticipate will have a
material effect on the reported income or net assets of the
Company.
CRITICAL ACCOUNTING JUDGEMENTS AND
KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Company’s accounting policies, which
are described in this note, the directors are required to make
judgements regarding the choice and application of accounting
policies, as well as estimates and assumptions about the
carrying amounts of assets and liabilities that are not readily
apparent from other sources. The estimates and associated
assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may
differ from these estimates.
The estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if
the revision affects only that period, or in the period of the
revision and future periods if the revision affects both current
and future periods.
The following are the critical judgements and estimates that the
directors have made in the process of applying the Company’s
accounting policies and that have the most significant effect on
the amounts recognised in the financial statements:
Critical Estimates - Warrants
In determining the fair value of warrants and the related
charges to the Income Statement, the Company makes
assumptions about future events and market conditions.
The fair value is determined using a valuation model which
is dependent on estimates, including the future volatility
of the Company’s share price and the expected life of the
warrants. This is determined by using historic data from similar
companies and historic trends on exercising warrants by
warrant holders. See note 13(b).
Judgements in Applying Accounting Policies and Key
Sources of Estimation Uncertainty - Impairment
Management is required to assess the exploration and
evaluation assets for indicators of impairment. Note 7 discloses
the carrying value of the exploration and evaluation assets.
Impairment is considered on a licence-by-licence basis.
In assessing the need to impair exploration and evaluation
assets the Board makes assumptions about the future progress
and likely successful outcome of exploration and drilling
activities. Due diligence is performed at the outset of the
investment before an investment is made. At an early stage
of exploration of each investment the need for impairment
is determined through monitoring market and industry
conditions, competent person reports on each prospect
and information from each licence’s main operator.
In the case of those licences where drilling has commenced
and management is committed to further exploration and
evaluation with sufficient financial resources available to do so,
impairment is not recognised unless technical analysis confirms
that commercially viable hydrocarbons are insufficient to
recover costs incurred.
In respect of PEDL201, the Burton on the Wolds-1 well was
drilled and no conventional commercial hydrocarbons were
discovered.
However, unconventional potential has been highlighted within
the licence area, of which the potential revenues would exceed
costs as at 31 December 2017.
The directors are considering their options to generate cash
inflows from this development and accordingly the directors
continue to actively evaluate the licence with a view to possible
future explorative drilling. As unconventional potential has been
highlighted in the licence area, of which the potential revenues
would exceed costs, no impairment is considered appropriate
at this time.
In February 2016, the Laughton-1 well within PEDL209 was
spudded. The primary objective was poorly developed in the
well and hydrocarbon saturations associated with the shows
were not sufficiently encouraging to warrant testing.
The rig was released from contract and the wellsite has been
fully restored to its original condition.
The directors have considered their options in respect of
PEDL209 and believe that although the licence interest currently
remains in the Union Jack Oil portfolio it is appropriate to
further impair the costs of £5,078 (2016: £298,711) spent
to date on this licence.
In respect of Wressle PEDL180/182, re-application for
planning is ongoing and management have made amendments
to the plan which they believe will satisfy the planning
committee and therefore the directors do not consider these
licences as requiring impairment.
In respect of licences, which are due to expire during the
current year, the operator has applied to the OGA to obtain
extensions for further exploration.
37
www.unionjackoil.comUNION JACK OIL PLC FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
1
BUSINESS AND OPERATING SEGMENTS
The Company is considered to have two operating segments, being the exploration and development of, and the
production of hydrocarbon discoveries onshore United Kingdom.
The value attributed to exploration and development assets as at 31 December 2017 was £2,846,278.
The value attributed to the production assets as at 31 December 2017 was £496,859.
All of the revenue reported for the year of £46, 203) is attributed to the producing/ production segment
(2016: £22,119 attributed to the exploration and development segment).
2
OPERATING LOSS
Operating loss is stated after charging:
Impairment charge
Depletion of producing assets
Staff costs (see note 3)
Fees payable to the Company’s auditor for:
– The audit of these financial statements
– Tax compliance services
31.12.17
£
31.12.16
£
5,078
17,322
204,920
25,500
16,400
298,711
–
197,399
18,000
6,000
The impairment charge of £5,078 (2016: £298,711) is in respect of Laughton (PEDL209).
3
STAFF COSTS
The aggregate payroll cost in the year of the employees, all of whom are directors, was as follows:
Salaries
Social security costs
31.12.17
£
31.12.16
£
186,667
18,253
180,000
17,399
204,920
197,399
The average number of persons employed by the Company during the year was 4 (2016: 4).
Details of each director’s remuneration are included in the Directors’ Report.
Highest paid director
The highest paid director received remuneration of £86,667 (2016: £80,000).
38
ANNUAL REPORT AND FINANCIAL STATEMENTS 2017UNION JACK OIL PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
4
FINANCE INCOME
Bank interest
5
TAXATION
Current tax
UK corporation tax
Adjustment in respect of prior periods
Total UK corporation tax charge
31.12.17
£
31.12.16
£
504
5,654
31.12.17
£
31.12.16
£
–
–
–
–
885
885
The differences between the current tax shown above and the amount calculated by applying the standard rate of UK
corporation tax for oil and gas companies of 40% (2016: 40%) to the loss before tax is as follows:
Loss on ordinary activities before tax
Tax on Company loss on ordinary activities at standard UK
corporation tax rate of 40% (2016: 40%)
Effects of:
Impairment of intangible assets not deductible for tax purposes
Finance income
Losses carried forward
Adjustment in respect of prior periods
Current tax charge for year
£
£
(746,822)
(891,709)
298,729
356,684
(2,031)
–
(296,698)
–
–
(119,484)
2,262
(239,462)
885
885
A deferred tax asset of £1,811,666 (2016: £1,514,968 - restated) relating to the carry forward of losses from trading
and pre-trading expenditure has not been recognised in the year as at present it is not envisaged that any tax will become
payable in the foreseeable future against which those losses could be utilised as deductions.
The restatement of the deferred tax asset was the consequence of a full review of the tax position of the Company.
39
www.unionjackoil.comUNION JACK OIL PLC FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
6
LOSS PER SHARE
The Company has issued warrants over ordinary shares which could potentially dilute the basic loss per share in the future.
Further details are given in note 13(b).
Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders by the weighted average number
of ordinary shares outstanding during the year.
During the current and prior year, the Company had warrants in issue as detailed in note 13(b). At 31 December 2017
the Company had 51,407,842 (2016: 55,052,548) warrants in issue. These warrants have not been taken into account
when calculating the diluted loss per share as their impact was anti-dilutive. Therefore, the basic and diluted loss per share
are the same.
Loss per share
2017
Pence
2016
Pence
Loss per share from continuing operations
(0.02)
(0.03)
The loss and weighted average number of ordinary shares used in the calculation of loss per share are as follows:
2017
£
2016
£
Loss used in the calculation of total basic and diluted earnings per share
(746,822)
(892,594)
Number of shares
2017
2016
Weighted average number of ordinary shares for the purposes of basic
and diluted loss per share
4,149,180,372
2,994,752,318
As detailed in note 13, the Company has 831,680,400 (2016: 831,680,400) deferred shares. These have not been included
within the calculations of basic shares above on the basis that IAS 33 defines an ordinary share as an equity instrument
that is subordinate to all other classes of equity instruments. Any residual interest in the assets of the Company would
not currently, on liquidation, go to the deferred shareholders, hence they are not currently considered subordinate.
These deferred shares have not been taken into account when calculating the diluted loss per share as their impact was
anti-dilutive.
The Company issued 1,032,589,694 new ordinary shares during the year (2016: 411,764,706).
40
ANNUAL REPORT AND FINANCIAL STATEMENTS 2017UNION JACK OIL PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
7
INTANGIBLE ASSETS
At 1 January
Costs incurred during the year
Transfer to development and production assets
Costs impaired
At 31 December
31.12.17
£
31.12.16
£
2,079,340
977,340
(245,324)
(5,078)
1,165,077
1,212,974
–
(298,711)
2,806,278
2,079,340
Additions to exploration and evaluation costs represent exploration and appraisal costs incurred in the year in respect of
unproven properties and provisions recognised for decommissioning and restoration liabilities.
Including the current year impairment of £5,078, total costs of £303,789 have been impaired with regard to PEDL209.
A formal impairment review has been carried out and the directors have considered and reviewed the potential value of all
projects and licences. The directors have also considered the likely opportunities for realising the value of licences and have
concluded that the likely value of each exploration area is individually in excess of its carrying amount with the exception of
PEDL209 as noted above.
In respect of PEDL180 and PEDL182 confidence remains that the Wressle development will be brought to production status
and all credible avenues to achieve this objective will be pursued. An Environment Agency permit for production is in place.
On this basis the licence costs are not impaired in these financial statements.
In respect of PEDL201 the directors are considering their options to generate cash inflows from this development.
As unconventional potential has been highlighted in the licence area, of which the potential revenues would exceed costs,
no impairment is considered appropriate at this time whilst further evaluation is planned and budgeted.
Included in the above intangible asset additions during the year are amounts arising in relation to increases in
decommissioning and restoration provisions (note 20).
At the beginning of the 2017 financial year management determined that the production levels at Keddington are
commercially viable, and as such the intangible exploration asset has been transferred to development and production assets.
Intangible assets (less provision for impairment) comprise amounts capitalised as follows:
Wressle
Burton on the Wolds
Keddington
Biscathorpe
North Kelsey
Holmwood
Louth Extension
Broughton North
Dukes Wood
Kirklington
PEDL180
PEDL201
PEDL005(R)
PEDL253
PEDL241
PEDL143
PEDL339
PEDL182
PEDL118
PEDL203
31.12.17
£
31.12.16
£
2,097,870
355,087
–
86,737
51,232
121,895
881
8,304
49,279
34,993
1,378,156
345,655
245,324
62,163
33,252
14,260
265
265
–
–
2,806,278
2,079,340
41
www.unionjackoil.comUNION JACK OIL PLC FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
8
PROPERTY, PLANT AND EQUIPMENT
Cost
At 1 January
Transfer from exploration and evaluation assets
Additions
At 31 December
Depreciation
At 1 January
Charge for the year
At 31 December
Net book value
Development and Production assets comprise amounts capitalised as follows:
31.12.17
£
31.12.16
£
–
245,324
268,857
514,181
–
–
17,322
17,322
496,859
–
–
–
–
–
–
–
–
–
31.12.17
£
31.12.16
£
Fiskerton Airfield
Keddington
EXL298
PEDL005(R)
193,206
303,653
–
–
The Board has assessed the development and production assets as at 31 December 2017 and have not identified any
indicators of impairment as set out in IAS 36 Impairment of assets.
42
ANNUAL REPORT AND FINANCIAL STATEMENTS 2017UNION JACK OIL PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
9
JOINT OPERATIONS
The Company is party to eleven joint arrangements which carry out exploration and development of hydrocarbons in the
United Kingdom. The parties to the arrangements and the Company’s percentage interest for the respective operations
are described in the Review of Operations. The joint operations in which the Company held an interest as at 31 December
2017 are as below:
Licence
Name
Proportion of
ownership interest
Principal place
of business
PEDL180
PEDL201
PEDL005R
PEDL253
PEDL241
PEDL143
PEDL339
PEDL182
PEDL118
PEDL203
EXL294
Wressle
Burton on the Wolds
Keddington
Biscathorpe
North Kelsey
Holmwood
Louth Extension
Broughton North
Dukes Wood
Kirklington
Fiskerton
15%
10%
20%
12%
20%
7.5%
20%
15%
16.67%
16.67%
20%
England
England
England
England
England
England
England
England
England
England
England
10
INVESTMENTS
The Company is the beneficial owner of 169,959 (2016: 169,959) ordinary shares in Elephant Oil Limited, a company
registered in England and Wales, for which it has paid £40,000 (2016: £40,000). Elephant Oil Limited has 23,218,183
(2016: 23,218,183) ordinary shares in issue. Union Jack Oil plc has a 0.73% (2016: 0.74%) interest in that company.
The principal activity of Elephant Oil Limited is the exploration and evaluation of hydrocarbon assets.
43
www.unionjackoil.comUNION JACK OIL PLC FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
11
TRADE AND OTHER RECEIVABLES
Trade receivables
VAT
Prepayments
31.12.17
£
31.12.16
£
19,048
29,677
17,147
16,902
16,343
29,455
65,872
62,700
The directors consider that the carrying values of trade and other receivables are approximate to their fair value.
All of the Company’s receivables have been reviewed for indications of impairment. None of the receivables was found
to be impaired.
12
CASH AND CASH EQUIVALENTS
Cash at bank
31.12.17
£
31.12.16
£
1 ,578,514
1,861,964
Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three months or less.
The carrying amount of these assets is equal to their fair value.
13(a)
SHARE CAPITAL
Allotted and issued:
Number
Class
Nominal
value
31.12.17
£
31.12.16
£
4,333,063,205
(31 December 2016: 3,300,473,511)
831,680,400
(31 December 2016: 831,680,400)
Total
Ordinary
0.025p
1,083,266
825,118
Deferred
0.225p
1,871,281
1,871,281
2,954,547
2,696,399
Ordinary shares hold voting rights and are entitled to any distributions made on winding up. Deferred shares do not hold
voting rights and are not entitled to distributions made on winding up.
Allotments during the year
In February 2017, 1,032,589,694 new ordinary shares with a par value of 0.025 pence were issued at 0.135 pence per share
and are fully paid.
Total consideration received was £1,393,997, of which £1,135,849 has arisen in share premium.
Issue costs of £140,342 have been charged to the share premium account.
44
ANNUAL REPORT AND FINANCIAL STATEMENTS 2017UNION JACK OIL PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
13(b) SHARE-BASED PAYMENTS – WARRANTS
Details of the number of warrants and the weighted average exercise price (WAEP) outstanding during the year
are as follows:
Year ended December 2017
Number of warrants
Outstanding and exercisable at the beginning of the year
Expired in the year
55,052,548
(3,644,706)
WAEP
£
0.003
0.003
Outstanding and exercisable at the end of the year
51,407,842
0.003
Year ended December 2016
Number of warrants
Outstanding and exercisable at the beginning of the year
Expired in the year
55,052,548
–
WAEP
£
0.003
0.003
Outstanding and exercisable at the end of the year
55,052,548
0.003
The fair values of warrants in issue are calculated using the Black-Scholes model. The inputs into the model are as follows:
Date of grant
04.12.12
17.03.14
26.09.14
Number in issue at 31 December 2017
Share price at date of grant
Exercise price
Expected volatility
Expected life (years)
Risk-free rate
Expected dividend yield
Fair value at date of grant
Earliest vesting date
Expiry date
6,074,510
0.3p
0.25p
69%
5.0
0.8464%
0%
£11,099
20.12.12
20.12.22
5,333,333
0.23p
0.225p
77%
2.5
0.26%
0%
£22,000
17.03.14
17.03.19
39,999,999
0.38p
0.225p
77%
2.5
0.26%
0%
£43,570
26.09.14
26.09.19
During the year 3,644,706 warrants expired. The fair value of those warrants was transferred from the share-based
payment reserve to accumulated deficit, where the expense was initially recognised.
An adjustment has additionally been made to the share-based payment reserve during the year to transfer out the fair value
of previously expired and exercised warrants. These have been adjusted against share premium and accumulated deficit in
accordance with the previous recognition of the warrants.
45
www.unionjackoil.comUNION JACK OIL PLC FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
14
RESERVES
The nature and purpose of each reserve within equity is as follows:
Share capital – represents the nominal value of shares issued.
Share premium – represents the amount subscribed for share capital in excess of nominal value, less related share
issue costs.
Share-based payment reserve – represents the cumulative cost of warrants issued in return for professional services.
Accumulated deficit – represents cumulative profits or losses, and all other net gains and losses and transactions with
owners not recognised elsewhere.
15
RECONCILIATION OF LOSS TO CASH GENERATED FROM OPERATIONS
Loss before taxation
Depletion of producing assets
Impairment of intangibles
Finance income
Income taxes paid
(Increase) / decrease in trade and other receivables
Increase / (decrease) in trade and other payables
31.12.17
£
31.12.16
£
(746,822)
17,322
5,078
(504)
–
(891,709)
–
298,711
(5,654)
(885)
(724,926)
(599,537)
(3,172)
224,767
(35,468)
(59,596)
Cash used in operations
(503,331)
(694,601)
46
ANNUAL REPORT AND FINANCIAL STATEMENTS 2017UNION JACK OIL PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
16
FINANCIAL INSTRUMENTS
Classification of financial instruments
The tables below set out the Company’s accounting classification of each class of its financial assets and liabilities.
Financial assets measured at cost
At 31 December 2017
Investments: available-for-sale
At 31 December 2016
Investments: available-for-sale
Financial assets measured at amortised cost
At 31 December 2017
Trade receivables
Cash and cash equivalents
Total carrying value
At 31 December 2016
Trade receivables
Cash and cash equivalents
Total carrying value
£
40,000
40,000
£
19,048
1,578,514
1,597,562
16,902
1,861,964
1,878,866
All of the above financial assets’ carrying values approximate to their fair values at 31 December 2017 and 31 December
2016 given their nature and short times to maturity.
Financial liabilities measured at amortised cost
At 31 December 2017
Trade payables
Accruals
Total carrying value
At 31 December 2016
Trade payables
Accruals
Other creditors
Total carrying value
£
250,225
59,854
310,079
59,145
24,000
2,167
85,312
All of the above financial liabilities’ carrying values approximate to their fair values at 31 December 2017 and 31 December
2016 given their nature and short times to maturity.
47
www.unionjackoil.comUNION JACK OIL PLC FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
17
FINANCIAL INSTRUMENT RISK EXPOSURE AND MANAGEMENT
The principal financial risks to which the Company is exposed are: liquidity risk, oil price risk and credit risk. This note
describes the Company’s objectives, policies and processes for managing those risks and the methods used to measure
them.
Credit risk
The Company’s credit risk is primarily attributable to its cash balances and such risk is limited because the third party
is an international bank.
The Company’s total credit risk amounts to the total of the sum of the receivables, cash and cash equivalents. At the year
end this amounted to £1,597,562 (2016: £1,878,866).
Liquidity risk
In managing liquidity risk, the main objective of the Company is to ensure that it has the ability to pay all of its liabilities as they
fall due. The Company monitors its levels of working capital to ensure that it can meet its debt repayments as they fall due.
The table below shows the undiscounted cash flows on the Company’s financial liabilities as at 31 December 2017 and
31 December 2016 on the basis of their earliest possible contractual maturity.
Oil price risk
The Company is exposed to oil price risk associated with sales of oil from production. The Company does not currently
consider it necessary to use hedging instruments to manage its exposure to this risk.
At 31 December 2017
Trade payables
Other creditors
Accruals
At 31 December 2016
Trade payables
Other creditors
Accruals
Capital management
Within
2 months
£
Within Greater than
6 months
£
2-6 months
£
Total
£
250,225
–
59,854
250,225
–
28,354
–
–
31,500
310,079
278,579
31,500
59,145
2,167
24,000
59,145
2,167
–
–
–
24,000
85,312
61,312
24,000
–
–
–
–
–
–
–
–
The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern, add shareholder
value and to maintain an optimal capital structure to reduce the cost of capital. The Company defines capital as being share
capital plus reserves as disclosed in the Balance Sheet.
The Board of Directors monitors the level of capital as compared to the Company’s commitments, and adjusts the level
of capital as is determined to be necessary, by issuing shares.
The Company is not subject to any externally imposed capital requirements.
48
ANNUAL REPORT AND FINANCIAL STATEMENTS 2017UNION JACK OIL PLC
18
FINANCIAL COMMITMENTS
The Company had no financial commitments as at 31 December 2017 or 31 December 2016, other than those recognised
in the Balance Sheet.
19
TRADE AND OTHER PAYABLES
Trade payables
Accruals
Other creditors
31.12.17
£
31.12.16
£
250,225
59,854
–
59,145
24,000
2,167
310,079
85,312
Trade payables in respect of 2017 were increased due to late delivery of invoices from suppliers.
20
PROVISIONS
As at 1 January 2016
Provision created during the year
Provision utilised during the year
At 31 December 2016
Provision created during the year
At 31 December 2017
Decommissioning
and Restatement
Provision
£
18,000
11,605
(11,605)
18,000
211,918
229,918
Provision has been made for decommissioning costs on productive fields. Provision has also been made for reinstatement
costs relating to exploration and evaluation assets where work performed to date gives rise to an obligation, principally for
site restoration. Assumptions, based on the current economic environment, have been made which the directors believe
are a reasonable basis upon which to estimate the future liability. This estimate will be reviewed regularly to take into
account any material changes to assumptions. Actual costs will depend on a number of factors, including future market
prices and any variation in the extent of decommissioning and reinstatement to be performed.
Decommissioning and reinstatement costs are currently expected to be utilised between 2018 and 2038.
Provisions created during the year, based on information provided by the operator, relate to obligations in respect
of Keddington, Fiskerton Airfield, Dukes Wood and Kirklington assets. Additional provision has been made in relation
to Wressle, based on information provided by the operator (2016: Laughton (PEDL209)). No provisions have been
utilised during the year. (2016: Laughton (PEDL209)).
49
www.unionjackoil.comUNION JACK OIL PLC FINANCIAL STATEMENTS
21
RELATED PARTY TRANSACTIONS
Details of key management personnel remuneration are disclosed in note 3. Key management comprises only the directors.
Charnia Resources (UK), an entity owned by Graham Bull, non-executive director, was paid £59,446 (2016: £38,400)
in respect of consulting fees. No amounts were outstanding at the year end (2016:nil).
Jayne Bramhill, spouse of David Bramhill, received the sum of £6,000 (2016: £6,000) from the Company in respect
of IT maintenance and administration costs. No amounts were outstanding at the year end.
22
CONTINGENT LIABILITIES
In the event of a discovery of oil within the PEDL143 Holmwood licence area, a balance of £159,375 would become
payable to one of the other parties to the licence. The liability is not provided for in these financial statements since
at this stage the payment is not probable due to the well timing and test schedules which remain unknown.
There were no contingent liabilities at 31 December 2016.
23
EVENTS AFTER THE BALANCE SHEET DATE
The following events have taken place after the year end:
In March 2018, 1,470,588,226 new ordinary shares were issued for cash at 0.085 pence per share raising approximately
£1,250,000 before expenses of £100,588.
The enlarged issued share capital following the issue of new shares described in this section is 5,803,651,431 ordinary
shares of 0.025 pence each.
In March 2018 the Company entered into a Commercial Partnership with UK based Humber Oil & Gas Limited and
a Memorandum of Understanding was signed by both parties whereby the two companies have agreed to co-invest
in selective UK upstream projects.
In March 2018 the Company entered into a Farm-in Agreement with Egdon Resources U.K. Limited and Montrose
Industries Limited to acquire a further 10% interest in PEDL253 containing the drill-ready Biscathorpe-2 Prospect.
Following this the Company now holds a 22% economic interest in the licence.
In March 2018, Joe O’Farrell purchased 58,823,529 new ordinary shares, following which he now holds a beneficial interest
in 177,693,592 ordinary shares representing approximately 3.06% of the share capital of the Company.
In March 2018, David Bramhill purchased 11,764,705 new ordinary shares, following which he now holds a beneficial
interest in 63,929,285 ordinary shares representing approximately 1.1% of the share capital of the Company.
50
ANNUAL REPORT AND FINANCIAL STATEMENTS 2017UNION JACK OIL PLC NOTICE OF ANNUAL GENERAL MEETING
SPECIAL RESOLUTION
6 Directors’ power to issue shares for cash
That, conditional upon the passing of resolution
number 5, the directors be and they are empowered
pursuant to Section 570(1) of the Act to allot equity
securities (as defined in Section 560(1) of the Act)
of the Company wholly for cash pursuant to the
authority of the directors under Section 551 of the
Act conferred by resolution 5 above as if Section
561(1) of the Act did not apply to such allotment
provided that the power conferred by this resolution
shall be limited to the allotment of equity securities up
to an aggregate nominal value equal to £725,456.43
(representing approximately 50% of the issued share
capital of the Company at the date of this notice) and,
unless previously revoked, varied or extended, this
power shall expire on the conclusion of the next Annual
General Meeting of the Company, except that the
Company may before the expiry of this power make
an offer or agreement which would or might require
equity securities to be allotted after such expiry and the
directors may allot equity securities in pursuance of such
an offer or agreement as if this power had not expired.
By order of the Board
Matthew Small
Company Secretary
Dated: 1 May 2018
Registered Office:
6 Charlotte Street
Bath BA1 2NE
Notice is hereby given that the Annual General Meeting
(the “AGM”) of Union Jack Oil plc (the “Company”) will
be held at the offices of Osborne Clarke, 2 Temple Back
East, Temple Quay, Bristol BS1 6EG on 31 May 2018 at
11.00 a.m. to consider and, if thought fit, pass the following
resolutions, of which resolutions numbered 1 to 5 will be
proposed as ordinary resolutions and resolution number
6 will be proposed as a special resolution:
ORDINARY RESOLUTIONS
1 Report and accounts
To receive the audited annual accounts of the Company
for the year ended 31 December 2017, together with
the Directors’ Report and the Auditor’s Report on
those annual accounts.
2 Re-election of director retiring by rotation
To re-elect Joseph O'Farrell as a director, who retires
by rotation in accordance with the Company’s Articles
of Association.
3 Re-appointment of auditor
To re-appoint BDO LLP as auditor of the Company to
hold office from the conclusion of this Annual General
Meeting until the conclusion of the next general meeting
at which accounts are laid before the Company.
4 Auditor’s remuneration
To authorise the directors to determine the
remuneration of the auditor.
5 Directors’ authority to allot shares
That, in substitution for any equivalent authorities and
powers granted to the directors prior to the passing of
this resolution, the directors be and they are generally
and unconditionally authorised pursuant to Section 551
of the Companies Act 2006 (the “Act”) to exercise all
powers of the Company to allot shares in the Company,
and to grant rights to subscribe for or to convert
any security into shares in the Company (“Relevant
Securities”) up to an aggregate nominal amount of
£725,456.43 (representing approximately 50% of the
issued share capital of the Company at the date of
this notice) provided that, unless previously revoked,
varied or extended, this authority shall expire on the
conclusion of the next Annual General Meeting of the
Company, except that the Company may at any time
before such expiry make an offer or agreement which
would or might require Relevant Securities to
be allotted after such expiry and the directors may
allot Relevant Securities in pursuance of such an offer
or agreement as if this authority had not expired.
51
www.unionjackoil.comUNION JACK OIL PLC ANNUAL GENERAL MEETING
8 Copies of the executive directors’ service contracts with the
Company and letters of appointment of the non-executive
directors are available for inspection at the registered office
of the Company during the usual business hours on any weekday
(Saturday, Sunday or public holidays excluded) from the date
of this notice until the conclusion of the AGM.
Notes:
1 Pursuant to Regulation 41 of the Uncertificated Securities
Regulations 2001 (as amended), only those members registered
in the register of members of the Company at 6.00 p.m.
on 29 May 2018 (or if the AGM is adjourned, 48 hours
before the time fixed for the adjourned AGM) shall be
entitled to attend and vote at the AGM in respect of
the number of shares registered in their name at that
time. In each case, changes to the register of members
after such time shall be disregarded in determining the
rights of any person to attend or vote at the AGM.
2 If you wish to attend the AGM in person, you should arrive at
the offices of Osborne Clarke, 2 Temple Back East, Temple
Quay, Bristol BS1 6EG in good time before the AGM, which
will commence at 11.00 a.m. In order to gain admittance to
the AGM, members may be required to prove their identity.
3 A member who is entitled to attend, speak and vote at the AGM
may appoint a proxy to attend, speak and vote instead of him.
A member may appoint more than one proxy provided each
proxy is appointed to exercise rights attached to different shares
(so a member must have more than one share to be able to
appoint more than one proxy). A proxy need not be a member
of the Company but must attend the AGM in order to represent
you. A proxy must vote in accordance with any instructions
given by the member by whom the proxy is appointed.
Appointing a proxy will not prevent a member from attending
in person and voting at the AGM (although voting in person at
the AGM will terminate the proxy appointment). A proxy form
is enclosed. The notes to the proxy form include instructions on
how to appoint the Chairman of the AGM or another person as
a proxy. You can only appoint a proxy using the procedures set
out in these notes and in the notes to the proxy form.
4 To be valid, a proxy form, and the original or duly certified
copy of the power of attorney or other authority (if any) under
which it is signed or authenticated, should reach the Company’s
registrar, Computershare Investor Services PLC of The Pavilions,
Bridgwater Road, Bristol BS99 6ZY, by no later than 11.00 a.m.
on 29 May 2018.
5 The notes to the proxy form include instructions on how to
appoint a proxy by using the CREST proxy appointment service.
6 In the case of joint holders of shares, the vote of the first named
in the register of members who tenders a vote, whether in
person or by proxy, shall be accepted to the exclusion of the
votes of other joint holders.
7 A member that is a company or other organisation not having
a physical presence cannot attend in person but can appoint
someone to represent it. This can be done in one of two ways:
either by the appointment of a proxy (described in Notes 3 to 5
above) or of a corporate representative. Members considering
the appointment of a corporate representative should check
their own legal position, the Company’s Articles of Association
and the relevant provision of the Companies Act 2006.
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ANNUAL REPORT AND FINANCIAL STATEMENTS 2017UNION JACK OIL PLC
Union Jack Oil plc
6 Charlotte Street,
Bath BA1 2NE,
England
Telephone: +44 (0) 1225 428139
Fax:
+44 (0) 1225 428140
Email: info@unionjackoil.com
Web: www.unionjackoil.com
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ANNUAL REPORT AND FINANCIAL STATEMENTS 2017UNION JACK OIL PLC