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U.K. onshore E&P Union Jack Oil is expanding into the U.S. with the purchase of three mineral royalty packages in the Permian Basin, the company announced Jan. 29 in a press release.
The total cash consideration for the royalties was 677, 235 pounds (US$854,070), completed using existing cash balances. The three packages include:
- Cronus Unit: a 25-well package in Midland County, Texas; comprised of nine Chevron and 16 XTO-operated wells;
- Powell Ranch Unit: a 15-well package in Upton County, Texas; comprised of seven horizontal and eight vertical wells operated by COG Operating LLC, a subsidiary of ConocoPhillips; and
- Palm Springs Unit: a 10-horizontal well package in Howard County, Texas, operated by Occidental.
Union Jack Oil listed a number of reasons for the strategic acquisition in its press release, including perpetual ownership with zero forward liabilities or obligations, well life expectancy in excess of 26 years and a monthly income with no development or operating costs. Each well targets multiple productive zones, including Lower Sprayberry, Wolfcamp A, Wolfcamp B Lower, Wolfcamp B Upper, Wolfcamp C and D, Jo Mill and Dean and Barnett.
“The investment climate for international investment outside of the U.K., especially within the United States, has improved significantly, driven primarily by streamlined asset ownership and the evolution of enabling technologies,” said David Brahmhill, executive chairman of Union Jack, in the press release. “These factors have been instrumental in Union Jack’s decision to expand its activities in the United States.”
The deals were brokered by Union Jack’s agent and adviser Reach Oil & Gas Inc., which will also manage the royalties. The two companies have also agreed to pursue future joint venture agreements for a number of accretive, exploration, drilling, development and potential production ventures in Oklahoma.
Gneiss Energy acted as financial adviser to the transaction.
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