Union Jack Oil PLC (AIM:UJO)'s update on its non-operated (40% economic interest) Wressle-1 well in North Lincolnshire was good news for the UK onshore-focused group, says house broker ShoreCap.
A new environmental permit came into effect on 14 December allowing much higher volumes with output now at 670 barrels daily against 550 previously.
A recently installed jet pump is capable of handling considerably higher daily fluid volumes and Wressle-1’s oil flow rate should gradually increase further over the coming weeks.
An update to the competent person’s report (CPR) on Wressle will be published next month and could result in a material reserves upgrade, believes ShoreCap.
"Before this, based on the flow rates and expectations reported today, we continue to expect Wressle-1 to perform at least in line with the rates achieved before the previously announced jet pump installation."
Financial forecasts for 2024 look well-underpinned, adds the broker, even if revenues in the current financial year are likely to face a moderate dent as a result of Wressle being offline through the jet pump installation.
Shore’s share price target remains 90p per share.