Union Jack Oil PLC (LON:UJO) is set for a phase of “strong activity” in the coming months, according to broker SP Angel.
The stock broker earlier this week arranged a £5mln equity fund raise which positions the UK onshore oiler for two new wells at the West Newton project along with seismic work.
SP Angel has a ‘strong buy’ recommendation and has set a 0.7p price target which suggests some 360% upside to the 0.15p placing price.
“The placing enables Union Jack to progress the technically and financially compelling West Newton project under a planned two well drilling and testing programme for H1 2020 which could add significantly to the earlier successes seen at the A-1 and A-2 discoveries,” SP Angel analyst Sam Wahab said in a note.
READ: Union Jack Oil raises £5mln for new wells
“The company also has the necessary funding to complete a seismic acquisition programme over other structures that have been highlighted over the licence area, that could hold significant additional upside potential.”
Wahab also noted that the sidetrack drilling at the Biscathorpe project could unlock some 40mln barrels of resources, which would be another “transformational hydrocarbon accumulation” that would complement the West Newton asset.
Additionally, at the Wressle project the analyst said that success – in a planning dispute – could lead to a commercial oil operation, flowing 500 barrels of oil per day gross, which could generate US$3mln a year for Union Jack.
In a statement on Wednesday, Union Jack chief executive said: “The board is delighted with the result of this successful fundraising,” said David Bramhill, Union Jack chairman.
“The placing provides funding to progress the technically and financially compelling West Newton project under a planned two well drilling and testing programme for H1 2020 which we expect will add significantly to the earlier successes seen at the A-1 and A-2 hydrocarbon discoveries.
"We also have in place the funds required to complete a seismic acquisition programme over other structures that have been highlighted over the licence area, that we believe hold significant upside potential over and above the West Newton project.”