Union Jack Oil PLC (AIM:UJO) current share price offers investors more than 300% upside, that’s according to stockbroker Shore Capital.
Analyst Craig Howie, in a note following Monday’s trading update, said that Union Jack’s shares “continue to trade at levels far beneath prior highs”, whilst adding that the broker “remains very confident in the investment case, which is reinforced by yet another good update today.”
Monday’s update highlighted that the Wressle oilfield, in which Union Jack holds a 40% interest, continues to exceed expectations with net production increasing by 55% from 134 barrels of oil per day (bopd) to 207 bopd.
The trading update comes ahead of Union Jack’s interim results, due 15 May.
Union Jack noted that Wressle is now ranked as the second-most productive onshore UK oilfield.
It also added that a new seismic interpretation and mapping exercise has suggested a significant increase in resources is possible from the Ashover Grit, Union Jack noted.
Planning and permitting work for a new development well at Wressle is ongoing, with drilling anticipated at the earliest opportunity after regulatory approval, it said. Additionally, in the second half of 2023, ongoing work is expected to further develop the field and increase oil production.
Shore Capital, house broker to Union Jack, described it as a very encouraging update.
“Our forecasts continue to indicate a robust financial performance and, noting in particular Union Jack’s debt-free balance sheet, shareholder-friendly distribution policy, strong cash generation and undemanding rating on standard trading multiples, our Risked NAV estimate is confidently maintained at 90p/share,” Howie added.