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Union Jack Oil upgraded by broker after West Newton discovery

Its 16.667% stake in West Newton could generate triple the current market value of the company, says broker

Union Jack Oil PLC - Union Ja
Union Jack holds stakes in three onshore oil developments across Yorkshire and Lincolnshire

SP Angel has upgraded its view on Union Jack Oil PLC (LON:UJO) on the back of the discovery of a “major onshore oil development” at its ‘jewel in the crown’ West Newton last month.

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.

Watch: Union Jack's three key projects have potential to 'substantially enhance' the company

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.


Quick facts: Union Jack Oil PLC

Price: 0.1625 GBX

Market: AIM
Market Cap: £32.2 m

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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

2 min read