Union Jack Oil the company has seen significant financial transformations with positive indicators and substantial revenues.
Union Jack reported in its final results that oil sales of £1.894m for FY21, an increase from £0.158m for FY20, had had a “dramatic effect” on the company’s income statement.
This has led to the company reporting its first gross profit. It also reported that the company’s FY21 revenues have already been comfortably exceeded by net revenues of £2.877.
The Company stated that significant revenue from Wressle development had benefited its financial health and significantly strengthened its balance sheet.
As of 31 December 2021, cash and cash equivalents were at £5.977m, as compared to FY20 £7.269m. It is still debt-free and its cash balance as of 9 May 2022 was £7.545m. Union Jack saw its losses drop to £0.853m, from £1.865m the previous year.
Union Jack claims that its financial situation means it can pay for all planned and operational CAPEX costs. This includes any drilling activities budgeted for a minimum of 12 months.
Union Jack announced in 2021 that a proppant squeeze exercise and coiled tubing exercise were completed at Wressle. This resulted in no water cut, and an instant flow rate of more than 1,000 barrels per day of high-quality oil (“bopd”) achieved with virtually zero water.
Union Jack has a 40% economic interest in ERCE at Wressle. A pressure test analysis showed that flow rates between 1,200 and 1,500 bopd are possible.
The Kirkham Abbey formation was confirmed to have significant hydrocarbons by the results of the West Newton Extended Well Test (“EWT”) program.
A review by the Independent RPS Group (‘RPS) predicted that West Newton’s horizontally drilled well would produce an initial average of 35.6 million cubic feet of gas and 1,000 barrels per day.
The North Sea Transition Authority (“NSTA”) has received a revised field development plan for Wressle. In the meantime, approval has been given to West Newton for A and B site work and a three-year permit extension.
UJO reports that the West Newton results are “highly optimistic regarding the prospects for the significant hydrocarbon discovery made to date, and their potential development.”
Union Jack also purchased an additional 15% interest in the PEDL253 license that contained the Biscathorpe prospect, bringing its total interest in the licence up to 45%.
David Bramhill, Executive Chairman, stated that he remains confident in Union Jack’s future. The Company has progressed a number of its key projects at Wressle, including in 2021. These have had significant revenues, and indicate that Wressle’s journey has just begun.
He stated that UJO was in “sound financial health” with a strong balance sheet and that the company is fully funded for the next 12 months.
The Company is currently funded for all G&A, OPEX, and contracted or planned CAPEX costs, including any budgeted drilling activities, for at least the next 12 months.
Union Jack, which highlighted to shareholders its belief that hydrocarbons will play an important role in the future energy security of the UK as the world’s demand for energy rises post-COVID-19, and the economy recovers, believe that hydrocarbons will also continue to play an important role.
Union Jack company solicitors progressing legal work on Capital Reduction to enable the Company to execute a share-buy-back programme or dividend payment.
Not forgetting the appeal against planning refusal at Biscathorpe submitted to Planning Inspectorate and has majority interests in West Newton, Keddington, Fiskerton Oilfield, and North Kelsey. Plus a 2.5% royalty interest in the North Sea Claymore, Piper and Scapa oilfields
The future certainly does look bright for this on-shore UK Small-Cap Oil and Gas producer.
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