Union Jack Oil PLC (AIM:UJO, OTCQB:UJOGF) has had its appetite whetted for further expansion in the United States, executive chair David Bramhill said in Monday’s full-year results statement.
The initial successes seen over the past twelve months have highlighted the “ease of entry and ability to execute” in the country, Bramhill said.
Union Jack has so far brought a pair of ‘discovery’ wells online for commercial production in Oklahoma, and another well in the same state is awaiting completion.
Moreover, the company has acquired a 45% interest in a ‘secondary recovery’ project, also in Oklahoma, and picked up revenue-generating royalties over wells in the Bakken Shale, Permian Basin and Eagle Ford Shale; so far, seeing more than a 25% return on its original investment.
Bramhill said the pace and ease of progress justifies the board’s decision to look abroad, to grow the business that had previously focused onshore UK.
“Our appetite for additional growth opportunities has been whetted by our recent positive experiences in the USA and discussions are at an advanced stage with Reach in respect of expanding our activities over the coming months and beyond,” Bramhill said.
"I believe the board's optimism in our further expansion in the USA, executed alongside a proactive drilling and development campaign, will deliver material rewards in due course.”
Financials
Union Jack reported £3.93 million of revenue in the year and a net profit of £649,213.
The company highlighted that this marks its third consecutive year of profitability.
Gross profit came in at £1.97 million and basic earnings per share were 0.61 pence.
It highlighted that the company remains debt-free, and held £2.53 million in cash at year-end.
Operations
Union Jack saw a 263% increase in 2P reserves at its Wressle project in the UK, rising to 2.37 million barrels of oil equivalent (boe) gross.
The Andrews 1-17 and 2-17 wells in Oklahoma, now known as the Andrews Field, entered commercial production.
The Moccasin 1-13 well, also in Oklahoma, was placed on restricted test production with rates of 80 to 100 barrels of oil per day.
In the UK, upgrade works at the Keddington oilfield are nearing completion.
At the Wressle field, project partners are advancing plans for high-value appraisal and development programmes. Particularly, the plan to unlock material proven reserves that remain in place within the Penistone Flags formation.
“The board is confident that within the Wressle development, there remains significant upside which will support the company with revenues for at least another decade,” Bramhill said.
"I also look forward to progress at West Newton. Encouragingly, the results from this key project, to date, signal a potentially highly valuable onshore project with resources comparable to those usually reported offshore.
“A significant onshore domestic gas resource, as indicated at West Newton, has the potential to become an important transition fuel in helping the UK achieve its 2050 Net Zero emissions target.”
A confident outlook
Bramhill told investors that Union Jack is confident that a potential increase in drilling, appraisal and development activity in both the UK and United States, which is currently being evaluated, has the potential for notable value creation for shareholders.
“We believe our heightened activity and the expected additional news-flow generated, combined with effective investor engagement on both sides of the Atlantic, will continue to attract the ongoing support of our existing shareholders and the attention of new investors, broadening the appeal of the company to a wider audience,” he added.
“The future of Union Jack remains bright.”