Union Jack Oil (UJO ), a UK-focused onshore conventional explorer, announced today a maiden special dividend and a share buyback programme.
Following Union Jack's robust financial performance in 2022, and an internal evaluation of its capital requirements, growth options, and other considerations, the company said it has decided to initiate a cash distribution by means of a maiden special dividend to shareholders, as well as a share buyback programme.
Maiden Special Dividend
Union Jack declared a gross dividend of 0.8p per share (a total payment of £903K) with a an LSE ex-dividend date of 17 November 2022, a record date of 18 November 2022, and a payment date of 16 December 2022.
Share Buyback Programme
Union Jack's share buyback programme will be funded from its existing cash resources, and within the limitations of authority given to it by shareholders at the most recent AGM. The programme will involve the purchase of ordinary shares in the open market, dependent on market conditions, price, volumes, and subject to UJO's "capital allocation and distribution policy criteria".
Union Jack will place repurchased shares into Treasury where they will not be entitled to voting rights or dividend payments, or included in its EPS calculation. All share purchases will be announced as soon as practicable, the company said.
Executive Chairman, David Bramhill commented: "Union Jack's financial position has been transformed during 2022 and it now has a robust balance sheet, a fully funded and active work programme for the next 18 months on its principal projects and has no borrowings. Our Capital Allocation and Distribution Policy and current excess cash position allows us to declare a Maiden Special Dividend and to implement a share buyback programme going forward, while importantly not impeding the Company's organic growth potential."
View from Vox:
Today's announcement marks a significant milestone and validation of Union Jack's strong growth across its balance sheet in 2022, as the company is now in a position to return more value to shareholders.
Union Jack has been hinting at the possibility of today's moves for several months as it reported strong cash balances, no debt, as well as a grant of a Capital Reduction by the High Court that created additional distributable reserves of £21.5m.
UJO shares jumped 15% today as investors cheered the new dividend, a share buyback programme expected to boost value, as well as the company's robust balance sheet, enabling the new polices. UJO shares are currently up 92% YTD despite challenging economic and market conditions.
Today's announcements will not impede Union Jack's continued growth, as the company made clear the dividend and buyback programmes will not affect its debt-free balance sheet for the duration of the oil price cycle, nor its funding requirements for its projects Wressle, West Newton, Keddington and Biscathorpe. Future distributions will be made in line with commodity price movements and the company's excess cash position, UJO said. The share buyback programme should result in an increase in EPS and improve UJO shares' trading liquidity.
Earlier this month, Union Jack marked another milestone as it recorded £10m of revenues from Wressle after a little over a year following recommencement of operations at the site in August 2021. The milestone further solidified Wressle's status as one of the most productive conventional-producing UK onshore oilfields, set to become second only to Perenco's Wytch Farm.
To date, Wressle has produced over 225,000 barrels of oil with zero water cut, with an average rate of 300 bopd and instantaneous rates of over 1,000 bopd achieved. Union Jack is actively developing the site, approved for production through 2039, and recently increased its stake in Wressle to 40%. GaffneyCline's recent independent report sees steady production of c. 800 bopd for at least another 5 years.
West Newton, Union Jack's other main asset, is set to become a second major revenue source for the company after a Competent Person's Report (CPR) last week estimated an 85.5% geological chance of success for the project. Large-scale drilling of a horizontal well at West Newton is on schedule for 2023, with commercial production beginning as early as 2026.
Union Jack's unaudited revenues from 1 January to date are in excess of £6.846m, and unaudited 3Q results demonstrated another profitable period for the company. Union Jack remains debt-free and fully funded for at least another 18 months.
Follow News & Updates from Union Jack Oil: