[source: Union Jack Oil]
In the year to 31 December 2021 and to date, hydrocarbon exploration firm Union Jack Oil (UJO ) said it has transformed financially with substantial revenues and positive indications.
In its final results published this morning, Union Jack said revenues from oil sales of £1.894m in FY21, up from £0.158m in FY20, have had “a dramatic effect” on its income statement and has resulted in the company reporting a gross profit for the first time. Net revenues of £2.877 registered to date have also already comfortably exceeded the FY21 revenues, it reported.
The Company noted that the significant revenues received from the Wressle development have transformed its financial well-being and ‘significantly strengthened’ its balance sheet.
Cash and cash equivalents as at 31 December 2021 came to £5.977m, compared to £7.269m in FY20. To date, it remains debt free and cash as at 9 May 2022 was £7.545m. Union Jack also slashed its losses for the year to £0.853m from £1.865m in the prior year.
Union Jack says its financial position means it is funded for all operational and contracted or planned CAPEX costs, including any budgeted drilling activities for at least the 12 months.
In 2021, Union Jack announced the successful completion of a proppant squeeze and coiled tubing exercise at the Wressle development which resulted in an instantaneous flow rate of over 1,000 barrels of high-quality oil per day (“bopd”) being achieved with zero water cut.
A pressure test analysis by ERCE at Wressle, in which Union Jack holds a 40% economic interest, indicates that potential flow rates of between 1,200 to 1,500 bopd are achievable.
Results from the West Newton Extended Well Test (“EWT”) programme that was carried out in 2H21 confirmed substantial hydrocarbon discoveries within the Kirkham Abbey formation.
An Independent RPS Group (‘RPS’) review predicts initial average production rates of up to 35.6 million cubic feet of gas and 1,000 bopd from a horizontally drilled well at West Newton.
A revised field development plan has been submitted to the North Sea Transition Authority (“NSTA”) for approval in regard to Wressle. Meanwhile, planning has now been granted at the West Newton site for both A and B site works and a three year permit extension, respectively.
UJO says the latest results at West Newton are “highly encouraging regarding the prospects of the significant hydrocarbon discoveries made to date and their development potential.”
In addition, Union Jack purchased a further 15% interest in the PEDL253 licence that contains the Biscathorpe Prospect, bringing the company’s overall interest in the licence to 45%.
Executive Chairman, David Bramhill, said: “My confidence in Union Jack’s future remains highly positive. During 2021 and to date, the Company has advanced a number of its key projects, especially at Wressle which, as stated earlier, have been transformational financially with substantial revenues and indications that the Wressle journey has only just commenced.”
He said UJO is in “sound financial health with a robust balance sheet”, and with the company fully funded for at least the next 12 months, he said the future of Union Jack “remains bright.”
Looking ahead, Union Jack anticipates that hydrocarbons will continue to play an important part in ensuring the energy security of the UK, particularly as the global demand for energy increases post COVID-19 and the global economy recovers, it highlighted to shareholders.
Post year end, Union Jack decided to undertake a capital reduction exercise to allow for the payment of a cash dividend to shareholders or to enable a share-buy-back programme.
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Today’s results highlight the continued progress made by Union Jack from FY21 through to 2022. This progress, along with a robust oil price and Wressle oil production, has generated solid revenues and underpins the Board’s expectation of ongoing future material cash flows.
As a result, the Board has now initiated plans for a Capital Reduction to allow for the payment of a dividend or to implement a share-buy-back programme to reward the firm’s shareholders.
Notably, the Company is also now fully funded for all G&A, OPEX, and contracted or planned CAPEX costs, including any budgeted drilling activities, for at least the next 12 months. The stock’s value has increased by over 50% in the past three months, reaching highs of 31p.
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