Union Jack Oil (UJO), a UK-based onshore hydrocarbon company, has announced that it has hit $13 million in cumulative net revenues from its Wressle development since the Lincolnshire project recommenced production in August 2021. That marks an increase of c. $1m since the last update in early January.
The company said the well is producing at a record rates under natural flow, and that site upgrades were ongoing, including the installation of microturbines. The upgrades are expected to further boost production for the project, in which it holds a 40% economic interest.
As broker Zeus points out, the microturbines will allow Wressle to begin using gas production to generate power for the development and reduce onsite flaring, which the company has suggested could increase production by around a fifth.
Union Jack also said that it remains cash flow positive covering all operational and capex costs, including drilling activities over the next year. This includes targeting the adjacent Penistone Flags formation in the second half of this year, with planning and technical work to confirm the development well location currently being progressed.
It remains debt-free, with over £10 million in cash balances, short-term receivables, and liquid investments as of February 3, 2023.
David Bramhill, Executive Chairman, commented: "Revenues from Wressle continue to bolster the Company's Balance Sheet. "Since the last production update, another impressive production performance from the Wressle-1 well has been recorded and the trend as seen throughout 2022 and the start of 2023 remains positive. "Cash balances are expanding significantly on a monthly basis, and we are funded for G&A, OPEX and contracted or planned CAPEX costs, including any drilling activities for at least the next 12 months."
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Strong cashflows from Wressle underpin development plans elsewhere across Union Jack’s portfolio. Those plans could be accelerated further should a second revenue stream be brought on stream from Penistone, where the company plans to collect and export gas rather than flaring it.
Permits and appeals are also pending for drilling at Keddington (55% interest) and Biscathorpe (45%) in H2 2023, while the company is awaiting the results of a planning appeal for North Kelsey (40%).
Union Jack’s shares were up 2.7% to 28.25p on the latest milestone, which leaves plenty of upside to Zeus’s risked NAV of 66p a share.