Malcy’s Blog – Oil price, Union Jack Oil, Predator Oil & Gas & finally

WTI $69.72 +$1.58, Brent $72.92 +$1.47, Diff -$3.20 -11c, NG $4.94 -9c, UKNG 148.5p +7.47p

By Malcolm Graham-Wood

Oil price

Another lacklustre week for oil as WTI was up 45 cents and Brent 31 cents, perhaps more interesting is the natural gas market which continues to rise, in the US it topped $5 and in the UK we are nearly at 150p, it was up another 12.5% last week. Whilst we are all running around trying to find reasons for the gas bubble I think that most commentators and indeed executives within gas companies have nothing original to add to the list of reasons we have all trotted out lately but boy do they love the revenue…

In the US there is still quite a lot of held production in the GoM following hurricane Ida. Wood Mack say that production is still 75% down at around 1.5m b/d and refining is also some 1.7m b/d short of capacity. This is worse than recent hurricanes but looking at some of the pictures of flooded refineries I would be surprised if they were back up any time soon. Also the rig count was up by 6 units overall to 503 and up 7 in oil to 401, recovering from last week’s fall.

Finally it is election time in Norway where the Labour party is predicted to win with its green manifesto which is quite difficult to square with the country’s massive oil revenues and thus economic dependence on hydrocarbons.

Union Jack Oil

Union Jack has announced its unaudited results for the Half Year ended 30 June 2021. As usual with similar companies it is current progress on operations underway that count more and no company can be more of a shining example than UJO. 

I refer of course initially to Wressle where oil production, following successful proppant squeeze of the Ashover Grit reservoir, significantly exceeding initial expectations of the 500 barrels of oil per day well deliverability projections’. Indeedfrom 19 August 2021 to 9 September 2021, Wressle has contributed approximately US$300,000 net to Union Jack from test production during this short period which to me is nothing short of amazing, it is clearly knocking the lights out production-wise. 

This means that assuming sustained deliverability, at current production rates Wressle is set to become the second ranked onshore oilfield in the UK next to Wytch Farm and that is just using existing data received. Add that to the considerable upside remaining at Wressle from the Wingfield Flags and Penistone Flags reservoirs, both of which have already demonstrated their ability to flow oil to surface during testing of the original discovery well, and in addition, the Broughton North prospect and boy is there some upside due here. 

Unsurprisingly, a leading energy consultancy is to be commissioned by Union Jack to prepare an updated Competent Persons Report on the Wressle development, this might just put the icing on the cake for what I would describe as a ‘monster’ development in terms of production, revenue and of course the national interest. 

The great news from Wressle has rather overshadowed the data gathering at West Newton B-1z, which is ongoing following gas and sample liquid hydrocarbons recovered to surface. Testing is now underway at West Newton-A2 well, where a 65 metre hydrocarbon column was previously discovered.

Meanwhile, acquisition of a further 15% of Biscathorpe, was a very smart move, bringing Union Jack’s interest to a material 45% in this, the third of UJO’s trio of potential drivers. The Biscathorpe side-track is planned to be drilled during 2022, from the existing B-2 well bore, targeting the Dinantian Carbonate discovery and Basal Westphalian sequences.  An AA rating for Carbon Intensity at Biscathorpe for potential upstream oil production following Gaffney Cline study is excellent and Union Jack management’s view is that Biscathorpe remains one of the UK’s largest onshore un-appraised conventional hydrocarbon targets. 

The company acquired a 2.5% interest in the Claymore Piper Royalty Complex, representing an attractive low-risk entry strategy to the North Sea that generates positive cash flows and delivers superior investment returns and is yet another success from UJO in a period where I consider the company has changed out of all proportion. 

Indeed, negotiations are at an advanced stage with two North American financial entities to acquire a further combined 25% interest in the Claymore Piper Royalty, further details of which will be announced once finalised.

Finally it is worth noting that UJO is debt free and revenues are now contributing from four assets in the Union Jack portfolio, an incredible performance by any criteria. 

David Bramhill, Executive Chairman, commented:

“The period covered in this Half Yearly Report has seen important progress made at our three key project interests, namely, Wressle, West Newton and Biscathorpe plus the addition of an attractive royalty revenue stream. Developments at our three material projects where we have meaningful economic interests have generated a steady stream of encouraging news flow, which we expect will be continued based on current activities.

“In the subsequent period to this Half Yearly Report, we have seen Wressle production rates well in excess of our projected 500 barrels of oil per day with a corresponding expectation of its potential to deliver material future revenues.

“Given these encouraging initial test results at Wressle, Union Jack management is of the opinion that, if Wressle is only half as good as we anticipate, then we will be hearing much more about this development for many years to come.

“The revenue potential from Wressle, the royalty stream and our wider appraisal testing and planned drilling activities, all augur well for the execution of our strategy in delivering material growth in the medium term and achieving our goal of building a sustainable, cash generating and profitable, UK onshore focused, mid-tier conventional hydrocarbon producer.

“The Board remains both confident and optimistic and the future of Union Jack remains bright.”

Having made a few comment above there is little that I can add to this statement except to say that in my view UJO is well set to deliver an outstanding return from their highly attractive portfolio of interests. In that respect a market cap of something way in excess of the current C. £25m should be more appropriate and given the upbeat nature with regard to Wressle to name but one I remain as confident as I have ever been about the prospects for UJO.

Predator Oil & Gas

Investors will be pleased to know that Predator Oil CEO Paul Griffiths and COO Lonny Baumgardner will provide a live presentation to update investors on the current business outlook via the Investor Meet Company platform on Tuesday 28th September at 16:00 UK local time. The online presentation is open to all existing and potential shareholders.

Questions can be submitted pre-event via your IMC dashboard or at any time during the live presentation via the “Ask a Question” function. Although the Company may not be able to answer every question it receives, it will address the most prominent within the confines of information already disclosed to the market. Responses to the Q&A from the live presentation will be published at the earliest opportunity on the Investor Meet Company platform.

Investor feedback can also be submitted directly to management post-event to ensure the Company can understand the views of all elements of its shareholder base.

Investors can sign up to Investor Meet Company for free and add to meet Predator Oil & Gas Holdings Plc:

https://www.investormeetcompany.com/predator-oil-gas-holdings-plc/register-investor

Investors who have already registered and added to meet the Company will be automatically invited.

And finally…

A busy weekend of sport was led by Emma Raducanu winning the US Open from qualifying and not losing a set, a last minute deal by Channel Four with Amazon meant that it had huge viewing figures. With Daniil Medvedev beating Djoko the guard is certainly changing in tennis.

Watching the crash between Lewis and Max at Monza yesterday got worse every time I viewed it, if Max had watched it he may have stopped to find out how Lewis was as he walked past his car…. Just a three place grid relegation next time. But once we knew all was OK it was great to see Danny Ric leading the way home from Lando in the two McLarens.

With Spurs losing to the Eagles at the start of the weekend the leadership of the prem was on offer and the top of the table this morning has a familiar feel about it with the Red Devils, Chelski, Liverpool and the Noisy Neighbours in the top four slots. No surprise that with all the publicity that CR7 came in with a brace of goals either.

It was the final weekend for Captains picks for the upcoming Ryder Cup due to be held at Whistling Straits in Wisconsin from 24-26 September. Harrington went with Poulter, Garcia and Lowry leaving Justin Rose just out of luck.

The opinions expressed here are those of the author

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 blog


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