Union Jack Oil UK portfolio offers both production growth and resource upside (LON: UJO)

Union Jack Oil

Union Jack Oil plc (LON:UJO) is the topic of conversation when DirectorsTalk Interviews caught up with Arden Partners Research Director Daniel Slater.

Union Jack Oil recently published its full year 2021 results. What were the key take aways in your view?

Bringing on Wressle in 2021 has significantly increased production and revenues for Union Jack, and this has continued in 2022 on sustained higher production levels and the strong oil price. This, along with the existing cash holding, gives the company optionality for executing future asset work programmes across its portfolio.

What should we expect from the company over the coming months?

First, completion of the ongoing development works on Wressle, followed by installation of gas export towards the end of the year, which should allow higher production rates. Second, we are looking for details of the next steps on West Newton, potentially including drilling of a horizontal well. Third, we are also looking for progress towards potential development of the Penistone Flags reservoir at Wressle, alongside, fourth, an update on planning for the Biscathorpe and North Kelsey wells, for potential drilling in 2023. As such, there should be plenty of operational news over the rest of 2022 and into 2023.

How do you view the company in terms of an investment case?

Union Jack’s diverse UK portfolio offers both production growth and resource upside. These are both on display at Wressle, with ongoing production driving cash flows for the company, and upcoming additional development works possibly driving further growth and/or extending the production plateau. At West Newton, the resource upside is very substantial, and if subsequent works can establish commercial flow then this could be very impactful for Union Jack. Biscathorpe and North Kelsey then represent potential drilling catalysts initially, but beyond this potential new development projects on success. This is all underpinned by the company’s cash flows, which provide important funding optionality.

Union Jack Oil (LON: UJO) is an onshore oil and gas exploration company with a focus on drilling, development and investment opportunities in the United Kingdom hydrocarbon sector listed on the London Stock Exchange AIM market.

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