West Newton was originally seen as a gas play but a re-evaluation of the Yorkshire site identified a gross oil column of around 45 metres underlying a gross gas column of 20 metres.
Union Jack has a 16.667% stake in West Newton and the broker estimates that on a net basis this might be three times the current market cap of £27.85mln, with UJO's share of the project worth £75mln.
Its two further onshore projects, Wressle and Biscathorpe in Lincolnshire, also have significant value said the broker.
Wressle is expected to receive planning approval from the local council on 5 November with oil tipped to flow at 500 barrels per day gross.
The results of the recently drilled Biscathorpe-2 well, meanwhile, have been misunderstood by the market believes the broker, especially the elevated gas readings.
“In the current climate, we continue to advocate those companies that pursue low-cost development/production strategies, and Union Jack has certainly delivered on this criterion, with transformational near-term running room in the stock to come in our view.”
The broker's rating is now ‘strong buy’ with a target price of 0.66p or 200% upside from the current market price of 0.22p.