Union Jack Oil Plc (LON:UJO), a leading player in the UK’s onshore oil and gas sector, has taken a significant step forward in the continued development of its Wressle project. On 16 September 2024, Union Jack announced that it had received planning permission for the next phase of work at Wressle, marking an exciting moment for the company as it advances this critical asset. This permission is seen as a major milestone, allowing Union Jack to expand production and unlock further value from this established oil field.
The Wressle project, in which Union Jack holds a 40% interest, has already proven to be a strong performer for the company, generating substantial cash flows since production began from the Wressle-1 well in 2021. The latest approval paves the way for two new development wells targeting the Penistone Flags formation, which has an estimated 1.9 million barrels of oil equivalent (mmboe). Additionally, the installation of gas processing and export facilities will open up further opportunities for gas production. These developments are expected to add to Union Jack’s already robust production from the Ashover Grit formation, bringing in important new volumes in the near future.
Daniel Slater, CFA, Research Analyst at Zeus Capital, commented on the news: “Gaining planning permission for the Wressle development is a key step for Union Jack. The company has successfully managed its assets in a challenging environment, and the new wells will provide a valuable boost to production, further enhancing its revenue base.”
A Broader Strategy for Growth
Wressle is not the only asset keeping Union Jack busy. The company’s portfolio is diverse, with activities ranging from exploration at West Newton to drilling programmes in Oklahoma, USA. The work at West Newton focuses on establishing commercial flow rates, while the USA operations, particularly in Texas and Oklahoma, have already started contributing to Union Jack’s revenues.
Union Jack’s entry into the US market is proving to be a strategic success, offering a strong balance to its UK operations. In a period of fiscal and regulatory uncertainty in the UK energy sector, the US assets provide the company with a valuable source of diversification and growth potential.
A Healthy Financial Position
Union Jack’s financial position is solid, with zero debt and a cash balance of £6.7 million at the end of 2023. The company’s steady cash flow, combined with potential future news from its US and UK assets, leaves it well-placed to continue executing its strategy. As highlighted in the Zeus Capital report, the shares are valued in line with the company’s total risked net asset value (NAV) of 72p, providing a positive outlook for investors.
On a Final Note
Union Jack Oil’s progress at Wressle marks another step in its ongoing growth story. With new wells soon to be drilled and gas production facilities being established, the company is set to further boost its output from one of its most important assets. Combined with its broader portfolio and successful US ventures, Union Jack Oil plc is demonstrating resilience and adaptability in a challenging market environment. As always, the company continues to look ahead, building a diversified and robust business poised for future success.
