Union Jack Oil “continue to indicate a robust financial performance” Shore Capital

Union Jack Oil

Union Jack Oil (LON:UJO) is the topic of conversation when DirectorsTalk caught up with Craig Howie, Analyst at Shore Capital.

Craig, Union Jack Oil announced landmark revenues of US$13m have now been reached at its flagship Wressle development, how does this compare with Shore forecasts?

Our last-published numbers for 2023 assume average daily hydrocarbon production of approximately 750boepd (gross). With site upgrades ongoing and the Wressle development continuing to demonstrate an impressive production performance, Union Jack’s latest update reinforces our belief that our prevailing production forecasts for the current financial year are now looking conservative. However, ahead of our next detailed model update, we continue to forecast revenues of approximately £9m in the current financial year. 

How is the share price for Union Jack Oil looking compared to your initiation note?

As discussed in our initiation note and subsequent commentary, Union Jack’s share price is trading at levels far beneath prior highs, although we remain very confident in the investment case. Our forecasts continue to indicate a robust financial performance and, noting in particular Union Jack’s debt-free balance sheet, ongoing share buyback programme, strong cash generation and undemanding rating on standard metrics, our Risked NAV estimate is confidently maintained at 90p/share.

How do you view the outlook for the company?

We believe that Union Jack has a very bright future, seeing strong scope for production to materially increase as development of the Penistone Flags reservoir and gas-to-wire initiatives are progressed at Wressle. We would also highlight Union Jack’s plans for an active drilling programme in 2023, for which the company is fully funded and which we believe provides excellent potential for important drilling catalysts as the year progresses.

What should investors be looking out for in terms of newsflow?

In addition to further regular updates on Wressle’s production performance, we expect full year 2022 results in May and also see scope for news in a variety of areas over the coming months –including possible updates on planned drilling across the portfolio, a new competent person’s report on Wressle, and developments on the planning front at Biscathorpe and North Kelsey.   

Union Jack Oil plc (LON:UJO) a UK focused onshore hydrocarbon production, development and exploration company.

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