Stockbroker SP Angel has repeated a ‘buy’ recommendation for Union Jack Oil PLC (AIM:UJO) despite another disappointing setback with planning permission, with a proposed programme at the Biscathorpe project denied on Monday.
The company reported, ahead of Monday’s market close, that its application for a side-track drilling operation at the Biscathorpe site was refused at a meeting of the Lincolnshire County Council Planning Committee.
“A disappointing setback for investors, and unfortunate timing given ongoing media pressure during COP26,” SP Analyst Sam Wahab said in a note.
“One has to question why the OGA continues to take licence fees and planning officers recommend approval for licence activity only for the Planning Committee to ultimately refuse. Nevertheless, given the material resource potential at Biscathorpe (STOIIP of 24.3MMbo with an upside of case of 36MMbo), we would expect the JV partners to appeal this decision in due course.”
SP Angel has stuck to its ‘strong buy’ recommendation but put its target price under review.
Wahab highlighted the company’s success and potential longevity at the Wressle field.
“The impressive performance at the company’s Wressle project (UJO 40% WI) is yielding material cash flows to the business enabling Union Jack to capture the current elevated oil price environment,” he added.
“Current production stems from the Ashover Grit alone, with further potential upside from the Penistone Flags and Wingfield Flags reservoirs.
“We also note that the production licence is viable for the next 15 years demonstrating the partners’ confidence in the long-term commerciality of the field.”
In September, one of the company’s two sites at the West Newton project was denied permission for an extended well test.