Union Jack Oil plc (LON:UJO) is gearing up for a significant boost in its US operations, with the imminent spudding of the Taylor-1 well in Oklahoma. This move is expected to be followed closely by the Moccasin-1 well, which could quickly enhance the company’s production volumes if successful.
Daniel Slater, CFA, an analyst at Zeus Capital, highlighted the importance of this new drilling activity: “Union Jack expects its Taylor-1 well in Oklahoma to spud before the end of October. The well is targeting a Hinton Remnant reservoir prospect (supported by 3D seismic), with secondary targets in the Misener and Wilcox reservoirs. Chance of success for the well is put at 40%.”
The Moccasin-1 well, planned to follow immediately after Taylor-1, aims to tap into promising structures identified in the Hinton and Wilcox reservoirs. With a 50% chance of success for the secondary targets, there is optimism about the potential outcomes. As Slater notes, “Moccasin-1 will then be drilled straight after…Chance of success in the main target is considered to be ‘high’, with 50% for the secondary targets.”
Union Jack Oil has a track record of bringing wells onstream quickly upon successful drilling. This was seen earlier this year with the Andrews 1-17 and 2-17 wells, which now contribute to the company’s production volumes. If Taylor-1 and Moccasin-1 follow a similar path, they could soon add further revenues to Union Jack’s balance sheet, providing a valuable boost to its growing portfolio in the United States.
The company’s UK activities are also progressing steadily, with revenues from its Wressle asset now at $21 million, an increase from $20 million in July. The joint venture at Wressle is planning the next development phase, which includes targeting the 1.9 million barrels of oil equivalent (mmboe) in the Penistone Flags formation. Slater points out the ongoing focus on expanding Union Jack’s production capacity, adding, “We look for this to be achieved and for the programme to go ahead in due course.”
With its diverse set of projects across the UK and USA, Union Jack Oil is positioned well for the coming months. As Slater summarises, “Based on the likelihood of news flow from the USA, Wressle, West Newton and elsewhere in the portfolio over the next 12-18 months, we have a positive outlook for the shares, and value these in-line with our total risked NAV of 70p.”
On a Final Note
Union Jack Oil’s strategic efforts to broaden its production base, both in the UK and the US, reflect a solid approach to growth. With new wells on the horizon and continued progress at existing assets, the company is demonstrating a clear path forward. Investors and industry watchers alike will be keenly anticipating the operational updates and potential successes that these projects may bring in the near future.
