Increased drilling and development activities throughout Union Jack Oil PLC (AIM: UJO)’s onshore UK assets could significantly enhance its stock value, as indicated by SP Angel.
A side-track well for infill drilling at the Keddington field (55% WI) has received planning approval, and the acquisition of equipment and services is on track, with the start of drilling projected for late 2023 or early 2024.
Regarding West Newton (16.7% WI), the main operator is engaging in financial discussions with third parties, looking forward to a horizontal appraisal well around the first half of 2024.
The Wressle oilfield in Lincolnshire is set to generate revenue in the mid-term, which could potentially lead to more direct benefits for shareholders and expansion, potentially branching out from its primary onshore UK base.
SP Angel recommends a ‘Buy’ with a target price set at 66p.
Similarly, the house broker ShoreCap emphasizes that while the primary focus remains onshore UK, particularly the Wressle project, Union Jack is exploring new opportunities further afield to reduce risks associated with the challenging UK fiscal and regulatory landscape.
“Considering the upcoming announcement of Wressle’s flow rates and a new CPR evaluation of this primary field, we keep our Risked NAV estimate at 90p/share,” commented the broker.
“The future of Union Jack remains bright.”
This is a very good set of results driven by a substantial cash flow from Wressle which is able to fund the development of a ‘balanced’ portfolio of assets all of which have exciting prospects. Union Jack’s management is carefully managing to invest in the estate as well as give shareholders a more than reasonable distribution of the proceeds from Wressle.
With these points in mind I’m confident that given that portfolio and current positive onshore economics, there is much to look forward to at Union Jack.
Malcolm Graham-Wood
