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Union Jack Oil boosts firepower with £7mln funding

Snapshot

  • Built a portfolio of minority stakes in UK projects
  • Wressle start-up a key catalyst
  • Enjoying success at West Newton project
oil rig

Quick facts: Union Jack Oil PLC

Price: 0.157 GBX

AIM:UJO
Market: AIM
Market Cap: £31.11 m
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What it does

David Bramhill, chief executive, explains that Union Jack Oil PLC (LON:UJO) has a very simple business model.

“We cherry-pick what we think are the nicest deals around and take an interest.

“We like minority stakes, so if something goes wrong, you haven’t killed the company.”

He reckons with onshore UK there is a 40% - 50% and sometimes even a 60% chance of success unlike offshore, where often he says it is an 8:1 bet.

“And we don’t do 8:1 shots,” he adds.

Union Jack Oil's key assets

• PEDL 183 West Newton 16.67% ( Operator Raithlin ) 

• PEDL180 Development Wressle: 40% Awaiting development approval (operator Egdon)

• PEDL005(R) Production Keddington: 20.0% Existing production (Egdon)

• PEDL182 Exploration Broughton North: 27.5% Wressle (Egdon)

• PEDL253 Exploration Biscathorpe: 22% (Egdon)

“In addition, Union Jack's 20% working interests in the producing Keddington and Fiskerton Airfield oil fields provide us with oil revenues and exposure to additional workover and drill targets in our focused areas.”

 

What the boss says: David Bramhill

In September, UJO raised £7mln through an oversubscribed funding round at 0.16p per share.

David Bramhill, Union Jack’s executive chairman, said he was delighted with the outcome, which he said laid a platform for further development of the AIM-listed group.

"The company is already funded for the imminent drilling at West Newton and for the associated Extended Well Test activities and the cost to first oil production at the Wressle development.

“With the fundraising net proceeds, our cash position increases to approximately £11mln and will assist in funding our next stage of growth.

"We also believe there will be attractive acquisition opportunities available from the ongoing fallout resulting from COVID, energy prices and BREXIT.”

 

What the broker says: SP Angel

SP Angel analyst Sam Wahab has a ‘strong buy’ rating for Union Jack, with a 0.7p price target suggesting substantial upside to the current market price.

“Union Jack’s investment case is relatively unique given its robust financial position and attractive project economics across its core asset base in our view,” Wahab said in a note.

“Shareholders will also be encouraged that the West Newton work programme continues despite current UK restrictions.

“West Newton is estimated to contain a base case of 146.4MMbbls of STOIIP and 211.5Bcf of gas – one of the largest UK onshore conventional discoveries.”

 

Latest video

 

Inflexion points

  • Wressle granted planning approval
  • Wressle can come on stream at 500 barrels per day
  • West Newton has potential to much larger than originally thought
  • Oil in place at West Newton is estimated at a base case 146mln barrels
  • Best case is oil-in-place of 283mln barrels.

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Union Jack Oil expects to be drilling at West Newton within weeks

Union Jack Oil PLC's (LON:UJO) David Bramhill tells Proactive London's Andrew Scott drilling is due to kick off in the next few weeks at the West Newton project, where an appraisal well will follow up last year’s successful discovery. The plan also includes the combined testing of the new well,...

on 4/8/20

3 min read