Monday 15 March 2021

Union Jack Oil plc (AIM: UJO), a UK focused, onshore hydrocarbon production, development and exploration company is pleased to announce the purchase from Cambridge Petroleum Royalties Limited (“CPRL”) of a 2.5% cash generating royalty interest (“Acquired Interest”) that is part of the royalty unit over 20% of the revenues from oil and gas production from the Claymore, Piper and Scapa oilfields located in the Central North Sea, known collectively as the Claymore and Piper Complex (the “Royalty”) for a total consideration, including working capital adjustments, of US$130,000 (£93,730) and paid from the Company’s existing cash balance.

Highlights

 An attractive, cash generating and high yielding investment, consistent with Union Jack’s wider strategy and objectives to invest in the UK oil and gas sector

 Offers superior financial returns from North Sea oil and gas production

 Generates a compelling estimated Internal Rate of Return (“IRR”) of approximately 129%

 Cash generating investment with an estimated average annual compound yield estimated at 16.5% over the life of the Royalty, superior to high street banks, other fixed interest, or treasury investment alternatives

 Payback, including accrued royalty payments of the original investment, is estimated to be less than 12 months

 The Company benefits from an indirect contractual exposure to North Sea offshore oil and gas production revenues without any ongoing capital investment, decommissioning and joint venture operating costs

 Represents the first such royalty investment in the Claymore and Piper Complex by Union Jack with further transactions planned for 2021 and where a second, material transaction is at an advanced stage

David Bramhill, Executive Chairman of Union Jack Oil commented: “This compelling investment in a cash generating royalty over the Claymore and Piper Complex’s oil and gas revenues, plays strongly to the Company’s technical and analytical strengths in oil and gas and represents a low-risk entry strategy to the North Sea while generating superior investment returns.

“The Royalty provides Union Jack with the benefits of an attractive cash flow stream and high yields from North Sea oil and gas production without the accompanying capital and operating costs associated with direct participation in the underlying oil field developments and infrastructure.

“The Royalty’s superior returns and cash flow characteristics are consistent with Union Jack’s wider strategy and objectives to invest in the UK oil and gas sector.

“This initial acquisition represents our first royalty investment over the Claymore and Piper Complex’s future oil and gas revenues and where we have the objective of making further investments during 2021. Encouragingly, a second material transaction is at an advanced stage.

“The objective of Union Jack remains to become a mid-tier producer and we see that is now within our grasp with development and free-flowing oil demonstrated at Wressle, the execution of the upcoming well tests at West Newton and planned drilling at Biscathorpe. All these projects are at an advanced stage and evidence significant progress towards our aim.”