- Union Jack Oil has reported a transformative set of 1H results with strong revenue of GBP4.38 million.
- The company recorded its maiden profit of GBP2.03 million during the period.
- The period saw approvals for the Field Development Plan for Wressle along with licences for production till 2039.
- Work is progressing on the JV West Newton Project with a conceptual development plan.
UK-focused conventional oil & gas player Union Jack Oil plc (LON:UJO) has clocked robust results for the first half of 2022. Riding high on a strong oil & gas price environment, the company reported considerable revenue growth and a maiden profit for the period ended 30 June 2022.
Union Jack is focused on drilling, development, production, and investment in the UK onshore hydrocarbon arena. The company’s core strategy includes the appraisal and development of its asset portfolio. The acquisition strategy is focused on assets that have a short lead time from acquisition to initial production.
(source: company update)
Factors that contributed to the transformative set of 1H results
Union Jack registered revenue of GBP4,384,254 for the half-year period ended 30 June 2022, up ~1700% from the previous corresponding period. The strong revenue growth has been primarily attributed to the consistent monthly cash flow, primarily from the company’s flagship Wressle Project. The maiden profit for the period stood at GBP2,034,086.
One of the notable achievements for the company during the reported period was the approval from the North Sea Transition Authority (NTSA) for the Wressle Field Development Plan. The NTSA also granted licences for the production phase till 2039.
Wressle Oilfield Development
The Wressle Oilfield is located on the Western Margin of the Humber Basin in Lincolnshire. The oilfield, which in a very short period exceeded pre-production expectations of 500bopd, continues to outperform since resuming production in August last year.
The company has been able to achieve instantaneous production rates in excess of 1,000 bopd, and it is working to remove restrictions on production rates. Works related to improving site facilities are planned and anticipated to improve production rates.
Wressle has produced more than 225,000 bbl of crude oil with zero water cut to date. The upside potential of the Wressle Field, Illustrative Production Profile, and GaffneyCline Reserves and the Resource Report are anticipated to be published in September 2022.
JV project goes full throttle
The Joint Venture West Newton Project is moving on schedule with a conceptual development plan focused on the project, predominantly as a major gas producer after receiving planning approval for both A and B site works and a three-year permit extension. On West Newton, the first horizontal appraisal well is scheduled to be drilled in 2023.
RPS Group expects to complete the Competent Person's Report, which covers West Newton and other important opportunities within PEDL183 by the end of Q3 2022.
In March 2022, Calmar LP received a cash payment of GBP2,083,333 for the early settlement of the deferred consideration for previous purchases of an additional 25% of interest in PEDL180 and PEDL182, which contain the Wressle development, raising the company's economic stake to 40%.
In August 2022, the High Court accepted a capital reduction that increased distributable reserves to the amount of GBP21,553,557, giving the company the freedom to pay future dividends and/or repurchase shares as needed.
Union Jack anticipates the next exciting phase of growth
Union Jack, which remains debt free, held GBP10,500,000 in cash, account receivables and liquid investments, as at 6 September 2022. The company expects this figure to grow considerably over the next six months and beyond.
The company is fully funded for a number of potential future wells across its major projects at West Newton, Biscathorpe, and Keddington, as well as other future development programs required at its Wressle flagship producing asset.
The company anticipates a busy second half of 2022 as activities from the project operators are increasing across West Newton, Keddington, and potentially at Biscathorpe projects.
Meanwhile, Wressle engineering and financial viability studies are advancing, focused on the potential development for gas monetisation and ongoing site upgrades.
The ongoing energy crisis in Europe has helped oil and gas prices stay firm. This favourable macro tailwinds help oil and gas players, such as Union Jack, to further strengthen their position. Union Jack's flagship Wressle Project and other near term development assets seem to bode well with company's growth path in view of present developments.