Union Jack Oil (LON:UJO) continues to demonstrate its strategic acumen as highlighted by two insightful research notes published by Zeus Capital. In early July 2025, Investment Research Analyst Daniel Slater, CFA, highlighted the renewed production at Keddington in Lincolnshire and the material farm-in to the Sark well in Oklahoma. Together, these developments showcase a balanced portfolio approach, combining steady cash generation from onshore UK assets with high-impact exploration opportunities in the USA.
Strengthening UK Cash Flows: Keddington Production Resumes
On 2 July 2025, Zeus Capital documented a significant operational milestone for Union Jack Oil at its 55 per cent-owned Keddington field in Lincolnshire. As Daniel Slater notes,
“Union Jack has announced resumption of production at its Keddington field (Union Jack 55 per cent) onshore UK, post a series of site upgrades. The field has achieved a rate of 43 bbl/d (based on 10.4 hours/day of production time) gross since it was brought back onstream in June, representing a significant uptick versus production prior to the upgrade programme, and the new facilities are continuing to be fully optimised.”
This uplift in output comes at a time when Brent crude is trading around US$80–85 per barrel, offering a favourable pricing environment. Slater emphasises the broader strategic benefits:
“This is positive news for Union Jack, reporting the successful programme at Keddington, and adding helpful additional production at a time of relatively decent oil prices. The company can use these additional cash flows to help continue underpinning its business while investing in new activities to boost production and drive news flow.”
By reintroducing forecasts that now include Keddington alongside Wressle in the UK and several US wells, Zeus Capital’s revised model underscores the field’s role in underpinning Union Jack’s medium-term cash flow . At end-2024, the company held £2.6 million of cash, maintained zero debt, and was generating steady revenues from Wressle, positioning it well to fund both ongoing development and new exploration ventures.
High-Impact US Exploration: Sark Well Farm-In
Just one week later, on 9 July 2025, Zeus Capital released its analysis of Union Jack’s entry into the Sark well in Oklahoma. Daniel Slater details the farm-in agreement:
“Union Jack has announced another exploration well farm in in Oklahoma, a material well that will be drilled in the coming months and can augment the company’s USA producing position on drilling success.”
Under the deal, Union Jack will earn a 60 per cent stake in the Sark well by funding 80 per cent of the costs, amounting to approximately US$1.1 million net. The well targets proven Hunton and Wilcox reservoirs, with secondary objectives in the Prue, Red Fork and Base Pennsylvanian sands. Importantly, the deeper Arbuckle formation offers an additional 1.50 million barrels of upside. The project carries an estimated 65 per cent chance of success and is scheduled for drilling in Q3 2025.
Slater is clear about the potential value addition:
“This is a positive move from Union Jack, in our view. The company has already had drilling success in Oklahoma since it began operating in the USA earlier this year, with the Andrews-1 and -2 wells and the Moccasin-1 well all onstream and contributing to company production. Success in the Sark well would potentially be a significant addition to this portfolio, with a material resource target. We will have to wait and see what flow rates can be achieved on drilling success, but the resource target implies that these could be meaningful in the context of Union Jack’s current production. This is all able to be achieved for a relatively modest CAPEX outlay. We await drilling of the well in the coming months.”
Although Zeus Capital’s base forecasts do not yet assume any production from Sark, the valuation model has been updated to reflect the farm-in CAPEX and the potential upside. As a result, the risked net asset value (NAV) per share rises from 60 pence to 65 pence, with the Sark well contributing 4.8 pence on a risked basis and 10 pence unrisked.
Valuation and Outlook
By integrating both upgrades at Keddington and the Sark farm-in, Zeus Capital’s total risked NAV now stands at 65 pence per share, compared with the previous 60 pence figure. The firm continues to assume long-term Brent at US$65 per barrel and WTI at US$60 per barrel, alongside modest CAPEX requirements for Moccasin, Wressle upgrades and potential activity at West Newton.
Union Jack’s balanced portfolio, comprising established UK production, near-term drilling in Oklahoma and longer-dated appraisal opportunities at West Newton and Biscathorpe, supports a positive medium-term outlook. The combined cash position (£2.6 million at end-2024) and zero net debt enable the company to pursue these initiatives without the need for significant equity dilution.
Key Operational and Financial Highlights
- Keddington Field (55 per cent)
– Resumed production in June 2025 post-upgrades at 43 bbl/d gross - Sark Well Farm-In (60 per cent stake)
– US$1.1 million net CAPEX for 80 per cent cost carry; 65 per cent chance of success; Q3 2025 drilling - NAV Upgrade
– Risked NAV increases from 60 pence to 65 pence per share - Balance Sheet Strength
– £2.6 million cash at end-2024; zero debt - UK & US Portfolio
– Integrated forecasts for Wressle, Keddington, Andrews-1/-2, Moccasin-1 and Sark wells
On both sides of the Atlantic, Union Jack Oil is methodically delivering on its strategy: enhancing production from existing assets, extending its footprint via value-accretive farm-ins, and maintaining financial discipline. Investors seeking exposure to a cash-generative, diversified onshore oil and gas producer may find Union Jack’s blend of stable revenues and exploration upside particularly compelling.
Final Thoughts
Union Jack Oil’s dual progress, with Keddington back onstream at enhanced rates and the strategic entry into the Sark well illustrates a well-executed growth strategy. Supported by robust balance sheet metrics and underpinned by Zeus Capital’s analytical rigour, the company is well placed to deliver meaningful shareholder value over the coming 12–18 months.
