But is Union Jack Oil (UJO) not a UK oil producer in an extremely troubled oil environment? It is… but only in a small and low-cost way and the oil market will swing back to a better environment as it always does. Meanwhile, the shares down from more than 0.30p last year and the asset potential here sees us ride again…yes, we have twice tipped this before and twice told you to bank big gains. Now for our hat-trick...
There is licence interests in two production assets, PEDL005(R) (55%) and EXL294 (20%) containing the Keddington and Fiskerton Airfield oilfields respectively. These combined are averaging 50 barrels of oil per day gross, though it is emphasised this is high-quality oil and there is some development potential. Nearer-term excitement though is Wressle (Union Jack 27.5%). Here, at last, there is development with first oil expected in the second of this year at a constrained rate of 500 barrels a day gross (137.5 net to Union Jack), a likely multi-decade production span and there is a stated currently estimated break-even oil price of $17.62 per barrel. That suggests even at around $30 oil, $0.6 million+ annual profit potential and at around $50, for example, $1.6 million+.
There is then West Newton (Union Jack 16.665%), where there’s been successful drilling, environment agency approval has been received for the recommencement of well testing and “the process for commencement of appraisal drilling operations is now underway for the conventional West Newton B-1 appraisal well”. On this asset, the company emphasises “all the results to date continue to support our belief that West Newton is a large scale, conventional onshore oil and gas development asset with potential offshore sized resources in place”. If you listen to boss David Bramhill's comments at the recent ShareProphets Shares show it is clear that the company could prove up a resource which on its own justifies a market cap several times the current valuation. This is the key to a re-rate well before Christmas. And there is also Biscathorpe (Union Jack 27.5%) - argued “remains one of the largest untested onshore prospects within the UK” - and a number of other potential development/exploration project interests.
The 2019 results showed revenue of £0.14 million, a gross loss of £0.08 million and administrative expenses of £1.3 million. However, there was £6.6 million of cash and total current assets of £6.8 million compared to total liabilities of £0.9 million, with the company emphasising “fully funded for all current drilling and well testing commitments”. The current market cap is though sub £22 million... Thus, at a current 0.14p offer price and up to 0.18p, targeting 0.28p+ to sell in the second half of the year as Wressle is developed to add to the Keddington and Fiskerton production and the vast potential of particularly West Newton is progressed, Buy.
Filed under: Union Jack Oil, Bidstack, Canadian Overseas Petroleum, Biffa, Inspirit Energy, HotStockRockets
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