Union Jack Oil : 2023 Annual Report

HYDROCARBON PRODUCTION, DRILLING, DEVELOPMENT AND INVESTMENT ONSHORE UNITED KINGDOM AND THE UNITED STATES OF AMERICA

UNION JACK OIL plc

ANNUAL REPORT AND FINANCIAL STATEMENTS

2023

DIRECTORS, OFFICERS AND ADVISERS

DIRECTORS	REGISTRARS	NOMINATED ADVISER
David Bramhill	Computershare Investor Services PLC	AND JOINT BROKER
SP Angel Corporate Finance LLP
Executive Chairman	The Pavilions,
Joseph O'Farrell	Bridgwater Road,	Prince Frederick House,
Bristol BS13 8AE,	35-39 Maddox Street,
Executive	England	London W1S 2PP,
Graham Bull		England
AUDITOR
Non-Executive	JOINT BROKER
	Crowe U.K. LLP
Raymond Godson	Shore Capital Stockbrokers Limited
2nd Floor,
Non-Executive	55 Ludgate Hill,	Cassini House,
Craig Howie	London EC4M 7JW,	57 St James's Street,
England	London SW1A 1LD,
Non-Executive
	England

COMPANY OFFICE

6 Charlotte Street,

Bath BA1 2NE,

England

Telephone: [phone]

Email: [e-mail]

Web: www.unionjackoil.com : @unionjackoilplc

REGISTERED NUMBER

07497220

SOLICITORS

Keystone Law

48 Chancery Lane,

London WC2A 1JF,

England

BANKERS

Royal Bank of Scotland plc Drummond House,

PO Box 1727,

1 Redheughs Avenue, Edinburgh EH12 9JN, Scotland

FINANCIAL PUBLIC RELATIONS

BlytheRay

4-5 Castle Court,

London EC3V 9DL,

England

INVESTOR RELATIONS USA

Harbor Access

107 Elm Street,

4th Floor, Stamford CT 06092, USA

SECRETARY AND REGISTERED OFFICE

Matthew Small

c/o Berkeley Hall Marshall Limited 6 Charlotte Street,

Bath BA1 2NE, England

FINANCIAL ADVISER

Gneiss Energy Limited 5th Floor,

64 North Row, Mayfair, London W1K 7DA, England

STRATEGIC PARTNERSHIPS ONSHORE UNITED KINGDOM AND THE UNITED STATES OF AMERICA

Union Jack Oil plc is primarily an onshore oil and gas company with a focus on production, drilling, development and investment in the United Kingdom and the United States of America.

The issued share capital is traded on the AIM Market of the London Stock Exchange (Ticker: UJO) and the OTCQB Venture Market in the United States of America (Ticker: UJOGF).

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.

CONTENTS

BUSINESS AND STRATEGY
Chairman's Statement	2
Strategic Report	16
Licence Interests	24
GOVERNANCE
Directors' Report	26
Corporate Governance Report	29
Independent Auditor's Report	42
on the Financial Statements
FINANCIAL STATEMENTS
Income Statement	47
Statement of	48
Comprehensive Income
Balance Sheet	49
Statement of Changes in Equity	50
Statement of Cash Flows	51
Principal Accounting Policies	52
Notes to the Financial Statements	60
ANNUAL GENERAL MEETING
Notice of Annual General Meeting	79

www.unionjackoil.com

1

CHAIRMAN'S

STATEMENT

I am delighted 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 2023.

Progress continued throughout the period, thanks to the cash flow from our flagship development, Wressle, where revenues continued to bolster the Company's robust Balance Sheet and enabled Union Jack to announce a net profit for the second consecutive year.

Union Jack remained profitable, despite lower oil prices and weaker exchange rates compared to 2022, as well as a near three-month shutdown at Wressle, whilst a downhole pump was installed and other significant site upgrades were carried out. This demonstrates the durability and dependability of the Company's key project and the prudent management of our cash resources.

The ERC Equipoise Limited ("ERCE") Competent Person's Report ("CPR") in respect of Wressle and Broughton North, matched our high expectations, demonstrating

a 263% increase in 2P Reserves to 2,373 mboe gross. This adds significant additional value to what is a material project within Union Jack's production and development portfolio within the UK.

We are expecting West Newton, another key onshore project within Union Jack's portfolio, with impressive Contingent Resources reported within the RPS Group Limited ("RPS") CPR, to see activity during the remainder of 2024 and beyond.

In 2023, a decision was made to seek further growth opportunities in other jurisdictions, where operations can be executed unhindered and a sensible and fair tax policy is applied. During the latter part of 2023, Union Jack commenced discussions with Reach Oil & Gas Company Inc ("Reach"), based in Oklahoma, United States of America ("USA"). As a result, Union Jack began assembling a quality Mineral Royalty portfolio providing a material monthly income.

Union Jack has also entered into a number of agreements with Reach in respect of drilling and seismic acquisition in Oklahoma.

The first well drilled on the West Bowlegs Prospect in Oklahoma, the Andrews 1-17, in which the Company holds a 45% working interest, is a commercial discovery, penetrating the primary objective, the Hunton Limestone, one of the main hydrocarbon reservoirs in Oklahoma. The well has now been put on production and in light

of this successful outcome, a further step-out drilling programme within associated areas is now being discussed between the joint venture partners.

A further well in Oklahoma, over and above the Hunton drilling campaign is expected to be drilled during Q3 2024, testing the Footwall Fold Prospect in the Wilzetta Fault play. This well, the Diana-1, is considered to be high-impact for Union Jack, where the rewards can be significant.

The prolific fault plays are the site of numerous oilfields across Central Oklahoma with nearby analogous production. The Diana-1 well is supported by recently reprocessed 3D seismic data.

In addition, several potential drilling sites have been identified along the Wilzetta Fault and a 3D seismic acquisition programme is planned during 2024. Reach's state-of-the-art equipment, supplied by UK based Stryde Limited, allows for cost effective and efficient seismic acquisition.

Following the early successes of the Company's entry into the USA involving the Andrews 1-17 discovery well and the financial attractions of Union Jack's expanding Mineral Royalties portfolio, the Board believes that the Company's further expansion into the USA, executed alongside a dynamic drilling campaign, will deliver material rewards in due course.

2

UNION JACK OIL PLC

ANNUAL REPORT AND FINANCIAL STATEMENTS 2023

CHAIRMAN'S STATEMENT

To increase the Company's corporate visibility in the USA, in April 2024, a quote was obtained for Union Jack's ordinary shares on the OTCQB Venture Market (Ticker: UJOGF). The Board believes that dual trading of the Company's shares on AIM and the OTCQB will provide enhanced investor benefits, which includes easy trading access for investors based in the USA and increased liquidity, due to a broader geographic pool of potential investors.

Ray Godson, non-executive director since the inception of the Company, will step down at the Company's upcoming Annual General Meeting. To prepare for this, the Company appointed Craig Howie in April 2024, who will assume Ray's role as Chairman of the Audit Committee and member

of the Remuneration Committee. Craig is well versed in energy, finance and the business of Union Jack.

Additional information on the Company's leading projects within the UK at Wressle and West Newton, and overviews on Biscathorpe, Keddington and North Kelsey, can be found later within this statement.

The financial results for 2023 are positive with the Company remaining in a strong position, free of debt, with a balanced work programme of potentially transformational development and drilling activities encompassing both sides of the Atlantic.

In view of the Company's sound financial position, and the additional income received since the year end from the Mineral Royalties, the Board, on 14 May 2024, declared a 0.25 pence dividend per ordinary share to be paid to qualifying shareholders on Friday 26 July 2024.

Further information can be found on the Company's website www.unionjackoil.com, presenting detailed technical information on Union Jack's projects and designed to inform shareholders and attract new investors to the Company.

In addition, Union Jack hosts a growing and active X (formerly Twitter) account @unionjackoilplc..

OPERATIONAL HIGHLIGHTS

• Flagship Wressle project continues to deliver following a workover, installation of a down hole pump and other significant site upgrades
• Wressle Competent Person's Report upgrades Reserves by 263%
• Application submitted for the drilling of two back-to-back Wressle development wells and the Penistone Flags gas monetisation
• Positive Biscathorpe planning appeal decision
• Sale of 2.5% interest in offshore North Sea Claymore Area Royalty
• Commencement of acquisition of United States Mineral Royalties and drilling activity in Oklahoma
• Planned drilling and development during 2024 to encompass both sides of the Atlantic
• Post Balance Sheet date, the Andrews 1-17 Well, in Oklahoma, USA, has been declared a commercial discovery

FINANCIAL HIGHLIGHTS

• Gross profit of £3,298,844 (2022: £5,100,479)
• Net profit of £859,089 (2022: £3,606,624)
• Basic earnings per share 0.79 pence (2022: 3.20 pence)
• Oil revenues £5,065,679 (2022: £8,507,050)
• The Company continues to be debt free
• Post Balance Sheet date, a dividend of 0.25 pence per ordinary share was declared, payable on 26 July 2024

BUSINESS AND STRATEGY

www.unionjackoil.com

3

CHAIRMAN'S STATEMENT

WRESSLE

DEVELOPMENT

PEDL180 AND PEDL182 (40%)

Wressle is located in Lincolnshire, on the western margin of the Humber Basin.

The Wressle-1 ("Wressle") discovery was defined on proprietary 3D seismic data. The structure is on trend with the Crosby Warren oilfield and the Broughton North Prospect, both located to the immediate northwest and the Brigg-1 discovery to the southeast. These wells contain hydrocarbons in several different sandstone reservoirs within the Upper Carboniferous succession. The majority of the Broughton North Prospect is covered by the same 3D seismic survey to that of the Wressle field.

Since the proppant squeeze and coiled tubing operations conducted during August 2021, Wressle has established itself as Union Jack's flagship project with initial production rates far exceeding original expectations. Wressle has generated revenues in excess of US$19,000,000 net to Union Jack before taxes, allowing the Company to be self-sustaining for almost three years without recourse

to external funding from the capital markets. To date, nearly 600,000 barrels of high-quality oil have been produced and sold from Wressle.

Production during 2023, ranged from 500 to 800 barrels of oil per day, accompanied by a water cut which is easily managed and disposed of at a nearby facility.

During December 2023, the joint venture partnership received the results of a CPR compiled by ERCE for Wressle and Broughton North Prospect.

The highlights of this report are as follows:

• 263% increase in 2P Reserves
• Reclassification of 1,883 million barrels of oil equivalent ("mboe") in Penistone Flags Contingent Resources to 2P Reserves
• 59% upgrade to the Ashover Grit and Wingfield Flags Estimated Ultimate Recoverable
• 23% upgrade to Broughton North Prospective 2U Resources

""

WRESSLE IS CURRENTLY THE SECOND

MOST PRODUCTIVE CONVENTIONAL

BROUGHTON NORTH

Crosby Warren PROPECT

PRODUCING ONSHORE OILFIELD IN THE UK AND HAS GENERATED IN EXCESS OF US$19,000,000

IN REVENUES TO UNION JACK SINCE RE-COMMENCEMENT OF PRODUCTION IN AUGUST 2021

Scunthorpe

PEDL182

WRESSLE 1

BROUGHTON 1

WRESSLE

PEDL180

GLANDFORD 1

BRIGG 1

Scrawby

HIBALDSTOW 1

PEDL241

NORTH KELSEY

PROSPECT

4

UNION JACK OIL PLC

ANNUAL REPORT AND FINANCIAL STATEMENTS 2023

CHAIRMAN'S STATEMENT

BUSINESS AND STRATEGY

Wressle Gross Oil and Gas Reserves (mboe)

Category		Gross Reserves
1P		2P	3P
2016 CPR			655		1,356
303
Added	-		-		-
Produced to	(519)		(519)		(519)
30 June 2023
Revisions	258		354		403
Reclassified	864		1,883		3,647
2023 CPR	906		2,373		4,887
Reserves Change	199%		263%		261%

Note: One barrel of oil equivalent ("boe") is equal to 5,714 standard cubic foot ("scf") of natural gas

Broughton North Gross Oil and Gas Prospective Resources (mboe)

	Gross Unrisked Prospective
Category		Resources
	1U	2U		3U
2016 CPR		494		1,156
180
Added	-	-		-
Produced to	-	-		-
30 June 2023
Revisions	33	114		376
Reclassified	-	-		-
2023 CPR	213	608		1,532

A planning application for the drilling of back-to-back(Wressle-2 and Wressle-3) wells and an upgrade of production facilities, including fluid storage tanks, separator system, surface pump and associated bunds, was submitted by the Operator on behalf of the joint venture partnership to the North Lincolnshire Council for approval, during February 2024.

In addition, a planning application has been submitted to enable the production of the material gas reserve contained within the Penistone Flags formation. Gas processing equipment will be sourced and a 600 metre underground gas pipeline will be installed, linking Wressle to the national gas grid.

These applications were finalised following the compilation of a raft of technical assessments including noise and vibration, landscape and visual, ecological, lighting, transport, flood and hydrogeological risk, to name some of the aspects considered.

The Board believes that the Company holds a material interest in Wressle that will continue to deliver significant revenues for at least the next decade. The Board looks forward to the remainder of 2024 and beyond with enthusiasm, where the Company expects to crystalise the additional value of this primary operation.

www.unionjackoil.com

5

CHAIRMAN'S STATEMENT

WEST NEWTON DEVELOPMENT

PEDL183 (16.665%)

PEDL183 is located onshore UK, north of the River Humber, encompassing the town of Beverley, East Yorkshire. The licence area is within the western sector of the Southern Zechstein Basin.

Union Jack entered into a farm-in during 2018 with Rathlin Energy (UK) Limited ("Rathlin") as the Operator, and since that time the West Newton A-2("WNA-2") and West Newton B-1Z("WNB-1Z") drilling programmes have yielded substantial hydrocarbon discoveries within the Kirkham Abbey formation.

The table below notes the West Newton gross unrisked technically recoverable sales volumes as calculated by independent engineers RPS Group Limited ("RPS") in late 2022.

Category	Gross Technically Recoverable
	Gas (bcf)	Liquids (mbbl)
1C	99.7	299.4
2C	197.6	593.0
3C	393.0	1,178.9

Throughout 2022 and 2023, data collected during drilling operations and well testing, which included core, oil and gas samples, wireline log and well test records, were analysed by independent laboratories CoreLab, Applied Petroleum Technology ("APT") and RPS. The results of these analyses, in conjunction with internal evaluations, have been invaluable in informing the upcoming programme of work and future drilling plans.

Laboratory reports confirm that the hydrocarbon-bearing Kirkham Abbey reservoir is extremely sensitive to aqueous fluids and that previous drilling of the West Newton wells with water-based mud had created near well-bore damage through the creation of very fine rock fragments, affecting the natural porosity and permeability of the formation, which in turn had a detrimental effect on its ability to flow. Further analyses have concluded that the use of dilute water-based acids during well testing would have also affected the flow characteristics of the Kirkham Abbey reservoir.

These tests indicate that by drilling the Kirkham Abbey reservoir with an oil-based drilling fluid, damage to the oil and gas reservoir should be minimised.

6

UNION JACK OIL PLC

ANNUAL REPORT AND FINANCIAL STATEMENTS 2023

CHAIRMAN'S STATEMENT

PEDL183

	ELLERBY	GREAT
	HATFIELD 1
	PROSPECT
Beverley	WEST	A2
CRAWBERRY HILL 1
NEWTON	A1
		B1Z	B1

RISBY 1

SPRING HILL

PROSPECT

Hull

WITHERNSEA

PROPECT

WINESTEAD 1

""

A FUTURE WEST NEWTON

DEVELOPMENT WILL BENEFIT

FROM BEING LOCATED IN

AN AREA THAT PROVIDES

ACCESS TO SUBSTANTIAL

EasingtonLOCAL INFRASTRUCTURE AND COULD DELIVER SIGNIFICANT VOLUMES OF ONSHORE LOW CARBON SALES GAS INTO THE UK'S ENERGY MARKET

BUSINESS AND STRATEGY

A feasibility study is being undertaken by independent energy consultants CNG Services Limited on a single well development and gas export plan. The scope of the West Newton feasibility study is to determine the technical and economic viability of a single well development, with production processed from a modular plant and a 3.5 kilometre pipeline from the WNA site to the National Transmission System at an existing above-ground installation.

Commercial gas production could be brought to market within months of a successful production test, resulting in a materially reduced capital investment which provides significant early cash flow whilst additional activity is carried out on the further development of the West Newton project.

GaffneyCline Associates, an international petroleum consultancy, is currently compiling a Carbon Intensity Study in respect of the gas resource at West Newton. Union Jack believes that, in these environmentally aware times, investors will only wish to commit investments in companies and projects that support a transition to a low- carbon economy. As part of our ongoing strategy in respect of the environment going forward, we commit to be totally transparent in respect of our projects and on how our Carbon Management Practice is implemented.

The joint venture partners continue to plan the most efficient and economic method to convert the impressive West Newton Contingent Resource into a viable hydrocarbon development within an acceptable time frame.

A future West Newton development will benefit from being located in an area that provides access to substantial local infrastructure and could deliver significant volumes of onshore low carbon sales gas into the UK's energy market.

www.unionjackoil.com

7

CHAIRMAN'S STATEMENT

KEDDINGTON

PEDL005(R) (55%)

The Keddington oilfield is located along the highly prospective East Barkwith Ridge, an east-west structural high on the southern margin of the Humber Basin.

A technical review by the Operator has confirmed that there remains an undrained oil resource located on the eastern side of the Keddington field. Planning consent for further drilling is already in place, presenting an opportunity to increase production via a development side-track from one of the existing wells.

To facilitate confirmation of the target definition and well design planning, re-processing of legacy 3D seismic data has been completed.

Modelling indicates that infill drilling is forecast to improve recovery from the Keddington field by between 113,000 to 183,000 barrels of oil, depending on the reservoir permeability model selected and the combination of infill targets.

The sub-surface location of a step-out well has been finalised and it is planned to drill the well, where planning consent is already granted, when the Operator deems appropriate.

There are plans to upgrade the production equipment at Keddington during 2024, the result of which is expected to increase efficiency and production rates.

8

UNION JACK OIL PLC

ANNUAL REPORT AND FINANCIAL STATEMENTS 2023