SP Angel, a City broker, maintains a ‘buy’ recommendation for Union Jack Oil PLC (AIM: UJO), forecasting over a threefold increase in its stock market value.
Analyst David Mirzai highlights Union Jack’s leading role in the Wressle field in Lincolnshire, noting its portfolio of oil and gas production generates significant free cash flow for reinvestment and dividends for shareholders.
Union Jack recently announced a major resource upgrade at Wressle, in collaboration with Europa Oil & Gas and Egdon Resources. Mirzai emphasizes that Wressle’s production over the past two years has significantly improved Union Jack’s financial standing. He anticipates the company will continue generating substantial cash, potentially leading to shareholder returns through buybacks or special dividends, and further investment in its portfolio.
The analyst suggests a target price of 66p per share, a notable increase from the early 2024 price of around 20p. He points to new investment opportunities, including developing the unexploited Penistone reservoir at Wressle, the Keddington reservoir, and the West Newton project. For Keddington, planning consent for a side-track well is already in place, with drilling expected in early 2024. At West Newton, discussions are ongoing for third-party financing, with a horizontal appraisal well planned in the first half of 2024.
Shore Capital’s Craig Howie also expressed optimism following the recent resource estimates.
He commends the substantial reserves upgrade and Union Jack’s effective production management at Wressle, backed by comprehensive technical evaluations and updated data analysis. Howie’s confidence in the revised volumetric assessment underscores the potential for significant value creation from these assets.
