Union Jack Oil Plc (LON:UJO, OTCQB: UJOGF) continues to move forward with its growth strategy, particularly with its expansion into the United States. The company has successfully drilled and commenced production from its latest U.S. well, reinforcing its commitment to delivering value to shareholders.
Strong Initial Production from Moccasin Well
Union Jack recently announced that its Moccasin 1-13 well in Oklahoma, where it holds a 45% working interest, has delivered promising initial results. The well achieved an impressive open hole flow rate of 621 barrels of oil equivalent per day (boe/d) and is currently producing 140 barrels per day (bpd) during the evaluation phase. To support sustained production, permanent facilities, including storage tanks and flowlines, have been installed, and oil sales have already commenced.
According to research analyst Steve Ferazani, CFA at Lighthouse Equity Research, “Management noted the new well is expected to produce material revenue for Union Jack. Moccasin marks the fourth U.S. well for Union Jack since entering the U.S. market last year.”
Expansion in the U.S. and Future Plans
Union Jack’s U.S. expansion has been gaining momentum, with the company actively working alongside its operating partner, Reach Oil and Gas Company Inc. The Moccasin well is the latest in a series of successful projects, following two productive Andrews wells, also with a 45% working interest, that are already generating cash flow.
Looking ahead, Union Jack and its partner plan to drill an additional well in the second quarter of 2025, pending further 3D seismic testing. Furthermore, increasing royalty income from its 165 mineral wells in the Permian Basin, Bakken, and Eagle Ford shales is expected to provide additional financial support for future drilling.
Strength in Financial Position
Union Jack continues to operate from a position of financial strength. As of 30 June 2024, the company remained debt-free, with a solid cash balance of £3.1 million. This financial stability ensures that Union Jack can fund its current drilling programme without requiring external capital.
The company’s onshore U.K. assets also play a crucial role in its cash flow generation. The Wressle oil field (40% interest) is already producing, and further development, including the Wressle-2 and Wressle-3 wells, is awaiting final approval. Additionally, the Keddington oil field (55% interest) is expected to restart production early this year, further boosting revenues.
Encouraging Outlook
Union Jack Oil’s robust operational performance, strategic U.S. expansion, and strong balance sheet position it well for future growth. Investors will be watching closely as the company continues to execute its drilling programme while leveraging cash flow from both its U.K. and U.S. assets.
With a 5-year EPS compound annual growth rate (CAGR) of 35%, Union Jack remains an attractive prospect for those seeking exposure to the oil and gas sector. The upcoming full-year 2024 financial results will provide further clarity on the company’s performance and outlook.
On a Final Note
Union Jack Oil is demonstrating its ability to grow sustainably while maintaining financial discipline. With a combination of successful U.S. operations, stable U.K. production, and a debt-free balance sheet, the company is well-positioned for the future. Investors looking for a company with solid fundamentals and expanding opportunities may find Union Jack Oil a compelling choice.
