Union Jack Oil PLC (AIM:UJO) has spent the New Year building a new leg to its business, venturing across the Atlantic to add a new layer of opportunity and excitement for the company and its investors.
It is envisaged as a pivot to fill Union Jack’s calendar with eye-catching value catalysts – through well drilling, testing and adding production - playing to the typical appetites of AIM’s oil and gas audience.
The American adventure is intended as an exciting new opportunity, but Bramhill (who has previous oil industry experience stateside) is keen that shareholders in his patriotically named firm understand that Union Jack isn’t exiting the UK.
Union Jack is sticking with Wressle, in Lincolnshire, and is keen to see progress at West Newton, its joint venture in Yorkshire, as both projects are seen by the company as prime ‘cherry picked’ opportunities to establish and grow profitable production.
The trouble, as executive chair David Bramhill told Proactive, is that whilst the British projects are profitable and worthwhile the company isn’t able to progress or scale at a pace that’s likely to get investor pulses racing.
“We're doing 250-300 barrels a day [net] at Wressle and that's great for a small company,” Bramhill said.
“We're making a profit, which is great. We've paid dividends. We've done share buybacks, which we intend to carry on.
“However, progress is not as quick as I would like it to be.”
“We've done well, we've operated using a model that’s worked. And we've delivered as we've said we would, however, that doesn't give your shares much excitement.
“As you know, shareholders want activity. They want drilling.
“In the UK, that can be a very, very slow process.
“But, in America, you can get planning and get on production within a month.”
Not only is the pace of progress faster in the US, the larger scale of America’s oil industry also means the economics are far superior as well.
Drilling a well in Oklahoma will be about four times cheaper than, for example, Lincolnshire.
According to Bramhill, the upcoming Oklahoma wells will likely cost around $1 million (£800,00) in total whereas a comparable UK well would now cost about $4 million (around £3.2 million) – quite how much of the extra British spend would go to lawyers and planning consultants, he did not spell out.
So, then, through a series of stock market announcements Union Jack has so far in 2024 put together a meaningful portfolio with a largely low-cost entry.
Union Jack Oil's entrance into Oklahoma began by securing royalties providing a revenue stream from existing wells and forming a strategic partnership with Reach Oil & Gas.
This collaboration marked the beginning of a series of investments in the region, starting with the Andrews-1 well in Seminole County – which boasts a 75% chance of geological success targeting the Hunton Limestone reservoir.
The well, expected to spud in early in the second quarter, could significantly enhance Union Jack's cash flow, complementing its profitable UK production.
Expanding its footprint further, Union Jack Oil subsequently announced another new farm-in deal with Reach, for a 75% interest in the Wilzetta project, planning the first well and a seismic exploration program.
Bramhill, meanwhile, was tight lipped over precise financial metrics but highlighted the attractive economics anticipated from the Oklahoma projects, as he anticipates the wells will enable rapid payback on investment and quickly start accumulating value.
Investors will have to awaiting further announcements for guidance and expectations on a well-by-well basis in Oklahoma.
Back in the UK, Union Jack also expects to continue its recent successes.
Another well is planned at Wressle, to open up another potentially lucrative productive reservoir, and the existing Wressle well will continue to be optimised.
The company is also not forgetting about West Newton, in Yorkshire, and hopes to see that project advance to meet the initial high expectations for the onshore discovery. And the Biscathorpe and Keddington projects are also said to still be ‘on the radar’ as Union Jack looks ahead.
As Union Jack navigates its ongoing transformation, there should be a significant uptick in newsflow and potential catalysts for the company.
Bramhill and his team at Union Jack set out to give investors more excitement, if the project execution lives up to the oil junior’s ambitions, it appears that they certainly will have delivered to that remit.
Investors ought to keep a close eye on Union Jack as this re-invention moves forward in the coming months.