Malcy’s Blog – Oil price, Union Jack Oil & Finally

WTI $40.97 +81c, Brent $43.30 +$1.08, Diff -$2.33 +27c, NG $2.04 -22c

By Malcolm Graham-Wood

Oil price

Oil rallied yesterday and has continued rising this morning, as expected the JMMC met and whilst not changing Opec+ policy it did warn strongly on adherence to quotas. Cheats now have until December to make up for their overproduction.

Indeed the KSA took it upon itself to admonish gamblers in the oil market and said that it would use pretty much any weapon in its armoury to make betting on a falling oil price unprofitable. Indeed they might even call an extraordinary full meeting to change policy if markets continued to think that supply would not be cut if necessary. You have been warned they said…..

Union Jack Oil

UJO announced a £7m raise yesterday through a significantly oversubscribed placing and subscription at £0.16p per share. The demand was well in excess of what the company’s brokers had expected and I understand that a primarily institution-led order book was of the highest quality.

The company has earmarked the proceeds for paying for the deferred cash consideration due on first oil at Wressle in Q4 2020, drilling a side-track well at Biscathorpe planned for 2021. In addition the company are now funded for ‘investment in growth’ at their other conventional onshore drill-ready projects such as a proposed low-cost side-track well at the producing Keddington field as well as a conventional well at North Kelsey. Finally, now with a cash position of £11m it can comfortably maintain licence and project obligations across its portfolio as well as keep a strong working capital situation.

David Bramhill, Executive Chairman of Union Jack, commented:

“The Company is already funded for the imminent drilling at West Newton and for the associated Extended Well Test activities and the cost to first oil production at the Wressle development. With the fundraising net proceeds, our cash position increases to approximately £11 million and will assist in funding our next growth phase.  This fund raising will allow us to continue to invest in our conventional onshore flagship projects and invest for growth in our wider licence interests and drill up to four wells in our drill-ready portfolio before the end of 2021”.

This raise has more than successfully given new and existing shareholders the opportunity to participate in the clearly exciting future that UJO offers. Already well funded, the company’s  timing is wise as with further virus worries and a portfolio of exciting opportunities that is now guaranteed well into the future. UJO remains a very attractive company and despite maybe having some post placing indigestion looks very cheap on any long term valuation metrics.

And finally…

The Premiership is fully underway this weekend with everyone back and that includes Gareth Bale, expected to sign back on loan with Spurs today and ready to face his original club, the Saints tomorrow. Elsewhere the Toffees host the Baggies, the Cottagers go to Elland Road, the Eagles are at the Theatre of Dreams whilst in the London derby on Saturday night the Gooners host the Hammers. On Sunday the Magpies welcome the Seagulls, Burnley go to the Foxes and the game of the weekend at Liverpool travel to Stamford Bridge.

In the US Open golf at Winged Foot, one of the hardest 3 courses on the calendar, Justin Thomas leads from Reed who had a hole in one, Pieters and Wolfe. Next come McIlroy and Westwood.

It might be worth watching Leinster v Sarries in the rugby Champions Cup although Owen Farrell is banned for the game.

(The opinions expressed here are those of the author, a columnist for Share Talk.)

Malcolm Graham-Wood

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Disclaimer: Malcy’s Blog is provided for general information about the international oil and gas industry and the companies that operate within it. It does not constitute investment advice and Malcy does not buy or sell shares, warrants or bonds in any company written about within the blog. Information is taken from publicly available sources and any comment is that of the author who does not take any third party comment in the publication.

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